March 16, 2018 - European coking coal buyers may have factored in the potential for more spot price volatility, opting to buy a range of Australian and US coals for loading in the next few months using fixed prices at higher levels than current spot prices to China.

Sources said an Oaky Creek premium mid-vol HCC contract had been settled for the second quarter at $240/mt FOB for a European customer or customers. In addition, several BHP Billiton coals, expected to be shipped together to Europe, were also reported traded on a spot basis at $239/mt for April loading. 

For Q1 2018, the quarterly premium HCC price based on spot indexes was $237/mt FOB.

Platts' Premium Low-Vol CFR China netback to Australia was at $208.25/mt FOB on Wednesday, up $1.75/mt from Tuesday, while the FOB Australia PLV assessment was unchanged at $215.50/mt FOB. 

A blend of Caval Ridge, Peak Downs and Saraji, known as BMA PLV and rated at 20% volatile matter and 72% CSR, traded at $239/mt FOB. A Saraji and Peak Downs mix known as BHP Blend and rated at 19.7% VM and 71% CSR was sold at $239/mt. Goonyella traded at $234/mt FOB, in the trade for 25,000 mt apiece of each coal type, loading in April.

One seller familiar with the premium mid-vol market was surprised that Goonyella would price at $234/mt, at a $5 discount to the low-vol blends. 

He believed Goonyella would be pricing at parity to low-vols, as several Atlantic buyers were desperately short of mid-vol, and alternatives from Canada, along with high-vols from the US may need to be considered, where possible. 

Oaky Creek was at $240/mt, and these prices would push up indicative offers for similar category material left to sell, he said.

US premium high-vol brands were heard trading in the low-to-mid $220s/mt FOB for Q2 shipments in recent business concluded. 

A recent steel mill preference for index-linked pricing, usually around the laycan, had given way to more fixed-priced sales recently, based on sources.

A European buyer was familiar with the BHP Billiton-Mitsubishi Alliance BMA PLV blend, produced from three of the mining alliance's mines in central Queensland -- Caval Ridge, Peak Downs and Saraji.

The blend had undergone testing, as the material became widely marketed ahead of the completion of infrastructure to facilitate blending onsite at the complex. He believed Caval Ridge, which has its own coal preparation plant, was unable to achieve similar pricing to Peak Downs and Saraji sold on its own. BHP Billiton is increasing sales using standardized specifications and opting to blend to meet those, reducing some emphasis on single mine coal branded sales, a source close to the company said. 

Companies controlling a large number of mines and preparation plants have developed met coal products independent of nomenclature around individual seams and mines, such as the former Alpha Natural Resources group and current Contura Energy in the US, and Teck Resources in Canada, he said. Blends of Saraji and Peak Downs, have long been supplied to customers in the past, another source in Europe said. 

BHP Billiton also offers a blend of 21.5% VM , 65% CSR coal known as Mid Vol Coking Coal, along with the widely traded Peak Downs North. 

Weather and railing-related factors have led to slowdown in shipping from Queensland and Canada, as well as the US East Coast, according to mining companies and trading sources. 

Further port and terminal works may restrict volumes out of the DBCT terminal at Hay Point, while Gladstone is recovering its shipments, he said.

Additional delays in the US have led to spot purchases, and some bargain hunting for coals with lower specifications than standard brands.

Several sources talked about some large buyers moving forward pricing discussions for Q2 and opting for fixed prices in Q2, to ensure cost certainty, rather than risk any weather related disruption spiking spot prices. 

CoalZoom.com - Your Foremost Source for Coal News