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JFE Steel settles 2Q PCI, semi-soft contracts

03 Apr 2018 11:02 (+01:00 GMT)
JFE Steel settles 2Q PCI, semi-soft contracts

Singapore, 3 April (Argus) — Japan's JFE Steel has agreed to a second-quarter 2018 pulverised coal injection (PCI) contract price of $155/t fob Australia with US-based Peabody Energy.

JFE Steel also agreed to a semi-soft coking coal term contract price of $136/t fob Australia with at least one Australian producer for April-June.

These settlements are below what JFE Steel paid for first-quarter contracts volumes of PCI and semi-soft at $156.50/t and $143/t fob Australia respectively.

Rival Japanese steel producer Nippon Steel and Sumitomo Metal (NSSMC) settled most of its first-quarter contracts for PCI and semi-soft at $159/t and $150/t in mid-March. NSSMC used a three-month average of premium hard coking coal prices indexes from the December-February period as guidance in first-quarter contract negotiations.

"It made sense for JFE to take this settlement because they are getting a discount from the previous quarter and also paying less than the latest Nippon settlement," a Japanese trader said.

Argus last assessed spot prices for low-volatile PCI at $150.40/t fob Australia and mid-volatile semi-soft coking coal at $140.50/t fob Australia. These prices have remained near the highest levels in almost a year as producers in both segments prioritised term contract volumes and had little tonnage available for the spot market.

But market indicator hard coking coal prices have undergone a correction to $193/t fob Australia from $231.90/t on 9 March, as sentiment was hit by improved production at Australian mines and a more bearish outlook on Chinese steel.