Coal news and updates

Q1 contract for coking coal by Japanese mills at $81

India Coal Market Watch

December 24: Japanese steelmakers have negotiated for coking coal prices for the January-March quarter of 2016 at $81 per ton, according to industry sources.

This marks a drop in contract prices for the sixth quarter in a row, the sources said. The $81 per ton also marks the cheapest contract for steelmakers since fiscal 2010, they said.

Coming on the heels of the recent eighth quarterly decline in the agreed-to price for iron ore, these lower costs faced by steelmakers are bound to give main users like automakers ammunition to negotiate lower prices for their steel materials.

Leading steelmakers like Nippon Steel & Sumitomo Metal and JFE Holdings unit JFE Steel negotiate every quarter with suppliers for coking coal and iron ore, using spot market prices as the basis.

China is the world’s biggest steel producer. But with the country’s economic slowdown, its steelmakers have cut back on crude steel production for 10 straight months. Some smaller steelmakers have even halted production. But major suppliers of coking coal and iron ore continued to boost output, creating a global imbalance in supply and demand.

Meanwhile, industry sources and marketmen said the final met coal contract settlement for first quarter of 2016 with semi-soft coking coal coming in at $66 per ton FOB Australia. Pulverised coal injection (PCI) contract prices had earlier been concluded at $69 per ton respectively.