“Prices had dropped below US$30/t FOB at both Newcastle and Richards Bay by mid October and continued to fall over the second half of the month,” the company said.
The timing is bad for producers as the start of the annual price negotiating season kicks in. The first time involvement this year of Japanese electricity utilities in spot markets has helped create a situation where spot prices are now lower than prices on options for additional volume under annually priced contracts.
Coking coal supply continues to remain tight, according to Energy Economics, with the soon to be settled negotiation between MIM and Mexican steel producer Sicartsa for 700,000t of hard coking coal, expected to be indicative of the emerging price trend.
“Hard coking coal transactions are thin on the ground at this time of year, but one exporting company informs us that it has recently sold hard coking coal at a price in excess of US$53/t FOB Queensland.”
Energy Economics predicts no hurry from the Japanese in settling annual prices this year, with the market expected to weaken early in 2002 as Queensland supply constrictions ease and demand continues to fall.
Despite most of Queensland’s longwall mines undergoing panel change-outs over recent weeks, the impact on supply out of the northern Bowen Basin has been relatively minor.
