The deal with the Asian steel mills was revealed by UBS and referenced in a Bloomberg report yesterday, although the newswire noted it did not know where the investment bank got its information from.

Goldman Sachs lifted its hard coking coal forecast to $315/t FOB almost two weeks ago, but expressed reservations at the time.

“The fact that spot prices are currently below $315/t and demand is expected to weaken through [the September quarter] makes us slightly suspicious,” Goldman said in a report.

“We suspect a high ‘headline’ price for tier one brands could be accompanied by substantial discounts for lesser brands and/or agreements on carryover tonnage that favour the buyers.”

Goldman said Japanese demand for semi-soft coking coal had also fallen, while production of this commodity was less affected by Queensland’s devastating wet season compared to hard coking and pulverised coal injection coal output.

UBS analyst Tom Price said in a note reported by Bloomberg that the Asian steel mill deal cast concern over coal supply due to the possibility of strike action by BHP Billiton Mitsubishi Alliance.

“This sudden deal reflects new concern over supply,” Price said.

Hard coking coal prices could remain at higher post Queensland flood levels if unions undertake a lengthy industrial relations campaign against seven BHP Billiton Mitsubishi Alliance mines in the state.