Australian producer Glencore and Japanese steelmaker Nippon Steel have settled the January-March 2017 semi-soft coking coal contract price at $171/mt, up 32% from $130/mt in Q4 this year, three sources close to the matter said Wednesday.
This comes after Nippon Steel inked a Q1 premium hard coking coal price for Glencore's premium mid-vol coal at $285/mt FOB Australia at the start of the week.
S&P Global Platts assessed spot semi-soft at $138.60/mt FOB Australia Tuesday, up from just $63.45/mt FOB Australia at the start of the year.
Market participants said that while the $171/mt FOB Australia price was higher than expected for Q1 2017, the semi-soft-to-premium coal price ratio represents a multi-year low.
The Q1 semi-soft settlement is equivalent to 60% of the premium hard coking coal settlement price, below the 65% price ratio achieved in Q4 2016.
The average price relativity over the last eight quarters has been 78%.
"The price increase [from Q4] is huge, but the relativity is still low, so we can accept this price," a north Asian steelmaker said.
Other Asian buyers were less satisfied, with one saying that weak thermal coal prices did not justify such a high Q1 semi-soft settlement price.
S&P Global Platts assessed FOB Newcastle thermal coal 6300 kcal/kg GAR at $85.25/mt FOB Australia Tuesday, down from a year-to-date peak of $115.50/mt FOB Australia on November 3.
Sources from two other Australian mining companies told Platts they were pleased with the Q1 settlement price, but admitted it would encourage coal producers to switch more tonnes from the thermal coal market into that of met coal.
"Now that the Q1 met coal price is close to $100/mt higher than Newcastle spot thermal coal, we'll see every single thermal producer try to sell more semi-soft," one of them said.
The largest Australian suppliers of semi-soft coking coal are Rio Tinto, Glencore, Yancoal, Peabody, BHP Billiton and Whitehaven.
A Tokyo-based spokeswoman for Nippon Steel declined comment on commercial negotiations, while Glencore officials in Australia could not be reached for comment at the time of reporting.
