Coking coal prices continued its upward trend Thursday, tripling in value to $231/mt FOB Australia from $76.45/mt at the beginning of the year. This is based on the S&P Global Platts Premium Low Vol benchmark assessment.
Spot prices have climbed $12.50/mt since the beginning of the week on the back of high liquidity.
At least eight trades were reported done or close to being concluded this week. End-user demand, coupled with trader interest fueled the trades.
In terms of a geographical breakdown, the trades were mostly Asia-centric though with some participation from Europe.
Concerns over supply of prime hard coals after two force majeure declarations by Anglo American and South 32 in the last two months, coupled with perennial Chinese coal shortages led to the price rally, sources said.
PLV spot price has now exceeded the Q4 contract price settlement in northeast Asia by $31/mt. The settlement was done at $200/mt FOB Australia last Friday. The soaring met coal prices have also affected steelmakers' production costs, which was previously dominated by the price of iron ore.
Met coal now accounts for 60% of a steel mill's production costs compared with 42% in 2015, according to Platts cost composition model.
Trades in the paper market, however, suggested a backwardated structure.
Paper trades on the Chicago Mercantile Exchange on Platts PLV FOB Australia were at $182/mt FOB Australia Thursday for Q1 2017.
