Improving Metallurgical Coal Market Price Formation

With coking coal pricing, all the world’s a critic, but there are plenty of things which can be done to improve price formation.

Notwithstanding that, the market is facing several shifts, some gradual and accretive, some sudden, which are breaking upon the market at the same time as disquiet about indexation.

This insight paper explores why dissatisfaction with coking coal benchmarks stems less from methodology and more from shifts in global supply, demand and buyer behaviour. It examines the limitations of the existing system, as well as how it can be improved.

Key highlights

• Market structure is driving pricing challenges

Concerns around metallurgical coal pricing are less about benchmark methodology and more about a market that has evolved beyond the pricing framework built for it.

• Metallurgical coal has not matched ‘big brother’ ore.

Unlike iron ore, metallurgical coal relies heavily on a single premium hard coking coal benchmark, limiting its ability to reflect changing global trade flows and buyer needs.

• Steelmaking technology is changing demand

The growing adoption of new technology, particularly in India, is increasing demand for a wider range of coal grades and reducing reliance on premium hard coking coal. 

• India is becoming a key pricing hub

As the fastest-growing importer of metallurgical coal, India is increasingly where global suppliers compete and prices are discovered.

Act now!

There are things that can be done today: inaction is a choice, not a destiny! If the status quo is suboptimal, change it.