Various media reports have Citigroup analysts saying BMA made agreements with Nippon Steel at $US115-125 a tonne for premium coking coal, while Dow Jones Newswires reported Merrill Lynch analysts as saying BMA was close to a deal with the steelmaker at $US129/t.
In a commodities report, Macquarie analysts said they expected the $US129/t deal to become a benchmark for 2009 contract pricing, and while 57% lower than last year’s annual contracts, they added it would still be the second-highest benchmark settlement ever, eclipsing $US125/t in 2005.
Overall the analysts expect BMA’s premium coking coal from Peak Downs, Saraji and Goonyella in Queensland’s Bowen Basin to fetch $US128-129/t for the year starting April.
BMA’s standard coking coal from Norwich Park was expected to settle at $US120/t, while the high-volatility coking coal from Gregory was placed at $US115/t.
However, whether carryover tonnes will be priced at last year’s historically high levels of $US300/t is still unclear and could make a big difference to the bottom line of Australian coal producers.
“We believe up to around 15 to 20 per cent of nominal 2008-09 contract volumes will remain undelivered at 31 March [end of contract period],” Macquarie analysts said.
“BHP Billiton has been insisting that these carryover tonnes will continue to be shipped at $300/t until the 2008-09 contract volumes are exhausted.”
Macquarie said if carryover volumes were priced at $US300/t and constituted 15% of deliveries in the 2009-10 financial year, the average realised premium coking coal price would be $US155/t.
The analysts urged caution with making any assumptions until the benchmark deals are confirmed but said the potential for some carryover tonnages to be recognised could put the final coking coal price above expectations.
