It also fits well with Stanmore’s goal of building long term relationships with major steel making customers, it said in its March quarterly report.
“The company continually monitors its optimal product mix and has the ability to produce a semi-hard coking coal (subject to existing contractual arrangements) in the future should hard coking coal process remain relatively strong,” it said.
“There is considerable flexibility built into the wash plant and our mining methods which provides the ability to respond to market conditions as appropriate.”
Coal processing at Isaac Plains commenced in April with the first shipment expected in early May.
Stanmore has signed or agreed terms for the Japanese financial year 2016 with top tier Japanese and Korean steel mills on annual semi-soft benchmark linked contracts totalling 900,000 tonnes of coking coal.
The company is well progressed with contract discussions for the remaining 200,000t of thermal coal product, it said.
“Recent positive moves in the hard coking coal price serve as a reminder that coking coal remains a relatively scarce resource, Stanmore said.
“The spot premium hard coking coal price has seen an increase of approximately 25% over the past 3 months to above $US100 per tonne.
“Whilst the PCI and SSCC coals have yet to experience the same level of increase, the uplift in premium products has provided some positive price momentum to the entire coking coal market.”
This is reflected in the recent June quarter settlement for Japanese benchmark coking coal prices at a $US 3-4 increase over the previous quarter.
“We note hard-coking coal benchmark prices increased from $81/t to $84/t, while semi-soft coking coal prices increased from $66/t to $70/t.
“In recent years, benchmark prices have typically outstripped spot, reflecting the top tier Japanese and Korean customers’ requirement for certainty and consistency of supply.
“If the spot market for hard coking coal products remain around current levels that is likely to put upwards pressure on benchmark settlements in the next quarter for all coking products.
“In addition, the recent settlement of the JPU benchmark thermal coal price at $61.60/t, well above the current thermal spot price, provides further confidence in the outlook for coal producers.”
