Nippon Steel Said To Agree To Highest Met Coal Price In 4 Years
12 October 2016
Nippon Steel & Sumitomo Metal Corp. has agreed to pay the most for metallurgical coal supplies in four years after China’s effort to trim its coal output helped spot prices nearly triple this year.
The Japanese steelmaker agreed with Peabody Energy Corp. to buy coking coal at $200 a ton during the fourth quarter, said people with knowledge of the situation, who asked not to be identified as the information isn’t public. It’s the highest contracted price since 2012 and compares with $92.50 in the third-quarter. The settlement typically sets the benchmark for the region, though it’s unclear if the level reached with Peabody will be used widely since Nippon is still in talks with other miners, said one of the people.
Spot prices have more than doubled since June as China cut output capacity while flooding in the Shanxi province trimmed supply, spurring a boost in the nation’s imports. About 65 percent of seaborne coal is supplied under quarterly contracts and Japanese steelmakers were the biggest buyers of the raw material last year, according to Morgan Stanley.
Spokeswomen for both companies declined to comment.
Spot hard coking coal climbed to $218.10 a ton on Tuesday, according to data from The Steel Index. That’s a record for the index, which started in January 2013. It averaged about $133 during the third quarter. Contract prices are still below the $330-a-ton record in 2011 after floods curbed supply from Australia, the world’s biggest exporter.
Source : bloomberg.com