A Japanese steelmaker has settled first-quarter 2018 contract low-vol pulverized coal injection (PCI) with a larger producer at $156.50/mt FOB Australia, market sources said Friday.
A settlement with a Japanese steelmaker ahead of the Q1 period was agreed, a source close to the matter said. The miner said to be involved did not immediately respond to an email seeking comment.
The agreement for contractual volume to a large steel group is said to be for low vol PCI with 12-14% volatile matter and 9%-10% ash, considered a benchmark setting brand.
Two marketing executives at PCI producers said quarterly pricing at $156.50/mt FOB was reportedly agreed between the parties two days prior.
Russian low ash premium PCI is now being marketed in the region at the same $156.50/mt FOB price for contract volumes, with higher volatile matter and higher ash PCI around $5-6/mt lower, one of the sources said.
The reported settlement follows a surge in premium hard coking coal spot prices, and is around $10/mt above current spot low-vol PCI prices.
Platts assessed spot Premium Low Vol at $257/mt FOB on Friday. At $156.50/mt, the PCI relativity, which is tracked by the market, for the quarterly contract against the current spot PLV price would be at around 61%. PCI relativities to spot premium HCC were at higher levels earlier this year. In Q4, PCI settlements for Australian producers were made at $135/mt FOB, and earlier ahead of the period at $127.50/mt FOB.
European mills may have covered PCI volumes for Q1 2018, with a mixture of fixed prices and index formulas. One buyer in Europe said PCI is already agreed for Q1 in the low $120s/mt CFR, with the highest price paid at $128/mt CFR.
Another European buyer earlier this week said PCI pricing in the $120s/mt FOB range is no longer available, as spot prices rose.
Since Q4 2016, PCI quarterly contract pricing from Australia has been in the 63%-70% relativity range to benchmark HCC.
In Q1 2017, PCI took a 63.2% relativity to HCC, the lowest ratio seen since Platts tracked contract pricing, based on calculations using industry data.
The Q4 2017 settlement between South Korea's POSCO and Square Resources for Foxleigh PCI at $135/mt FOB Australia yielded a relativity of 70.3% to pricing of around $192/mt FOB used in benchmark premium HCC contracts for Q4 2017.
