The Asia Pacific met coal market started the weak largely steady, though premium prices firmed on a slightly stronger demand outlook in China.
Last week's rally in domestic Chinese steel prices might have supported sentiment, said a steelmaker in East China.
Combined with weak iron ore prices, this uptrend has helped to widen mill margins, the mill source said.
Platts assessed Q235 5.5mm HRC in Shanghai, which has a tight historical correlation with met coal imports, at Yuan 3,050-3,070/mt ($497-500/mt) December 8, including 17% VAT, up Yuan 10/mt from first week of December.
This marks a rise of Yuan 50/mt since the start of this month.
One Shanghai trader stressed the greater appeal for January shipments for Chinese end-users, compared to December or February ones.
Most end-users had already restocked sufficiently for December, while steelmakers avoided buying cargoes loading in February as it would be within weeks of the Lunar New Year holidays, the trading source explained.
However, Chinese end-users were still cautious, with at least two purchasing managers from North China mills reluctant to fix spot deals as there was still uncertainty over the time frame of scrapping the 3% coking coal import tariff.
Platts assessed Australian premium low-vol HCC 25 cents higher from December 5 at $122.25/mt CFR China December 8, while tier-two HCC prices were assessed steady at $112.50/mt CFR China.
PCI prices soften a touch
Bids in the PCI segment were weaker.
Richer spot supply for January as well as cheaper domestic coals could put a stop to further price gains, one large steelmaker said.
The mill source said his procurement share of PCI imports had dropped from 70% in October to 30% of total consumption last month.
Both low-vol and mid-tier PCI prices fell 25 cents from first week of December at $101.75/mt and $94.75/mt CFR China, respectively.
At the Dalian Commodity Exchange, the most active May contract lost Yuan 4/mt from December 5 to close at Yuan 759/mt, while the May coke contract declined Yuan 7/mt to Yuan 1,032/mt compared with first week of December.
Q1 term talks set to begin
Elsewhere, Japanese quarterly contract negotiations were said to be starting in earnest this week following higher-level discussions last week, said a Japanese mill source.
For hard coking coal, a rollover (at $119/mt FOB) would be "the best outcome for both parties," the mill source said.
However, talk of BMA monthly contract offers at $116-118/mt FOB for January was undermining the likelihood of a rollover, he added.
The tight $1/mt spread between premium low-vol Peak Downs and premium mid-vol Goonyella -- down from $3-4/mt typically -- in the monthly offer could impact the price discussions.
The spread has narrowed in recent months as supply of premium mid-vol has tightened mostly due to poor performance at Anglo American's Moranbah North mine, participants said.
As a possible consequence, spot valuations for such coals outside China have also firmed.
A deal was done December 8 for a 40,000 mt cargo of straight Australian premium mid-vol with below 70% CSR, at $116.50/mt FOB Australia, for December laycan.
This was within 50 cents of two other deals reported concluded within the last five days.