Tuesday, March 24, 2015

Indian state-owned mills settle Q2 met coal at $109.50/mt FOB, down $7.50/mt from Q1

Indian state-owned steelmakers Steel Authority of India or SAIL and Rashtriya Ispat Nigam Limited or RINL have agreed April-June premium low-vol coking coal prices with Australia's Anglo Americanand US' Peabody at $109.50/mt FOB Australia, three sources close to the matter said Monday, March 23.

The Q2 price, settled late last week, was $7.50/mt lower than the mills' term deals for Q1 metallurgical coal and down $10.50/mt from Q2 2014.

The settlement price was in line with that agreed between the mining companies and Japanese steelmakers earlier last week.

Multiple sources said suppliers had followed a spot deal agreed between BHP Billiton-Mitsubishi Alliance or BMA and Nippon Steel & Sumitomo Metal Corporation rather than a price reflecting substantial contracted volumes.

US miners Alpha Natural Resources and Logan & Kanawha or L&K have inked Q2 deals with the Indian mills at $100/mt FOB US for five cargoes, sources said.

Of these, Alpha sold three Panamaxes of its Cambria Creek brand to SAIL, and L&K two shipments of its mid-vol material.

The Q2 prices for premium low-vol coals, such as Anglo American's German Creek brand and mid-vol material like Anglo's Moranbah North, were set at $109.50/mt FOB Australia.

Premium low-vol HCC was last assessed by Platts Friday at $108.25/mt CFR China, or a Panamax freight-derived netback of $100.20/mt FOB Eastern Australia -- $9.30/mt below the Q2 settlement level.

Anglo American will supply 2.7 million mt of coal to SAIL for the fiscal year starting April, including 9-10 Panamaxes for Q2, sources said.

This includes a quantity of Dawson Valley HCC, a unique blend targeted at India's steel public sector. RINL will reportedly obtain about a third of SAIL's annual volumes from the Australian miner.

Peabody will supply 750,000 mt for the year, sources said, adding this will include two Panamaxes for Q2.

BMA was still in negotiations for Q2 volumes with buyers, according to sources. The miner is understood to be opting for finalizing a pricing arrangement that could involve index-linked fallback clauses.

BMA and Anglo American declined comment on the quarterly negotiations, while Brisbane-based officials from Peabody could not be reached for comment. SAIL officials were unable to respond by time of publication Monday.

By Kenneth Foo, Platts
Edited by Wendy Wells, Platts