MARKETS

Met coal prices to beat forecasts: Goldman

JAPANESE steelmakers are closer to settling on a hard coking coal price of $US315 per tonne free-on-board for the September quarter, according to analysts from Goldman Sachs.

Blair Price
Met coal prices to beat forecasts: Goldman

The price would be in line with earlier reports of a $315/t deal between Anglo American Metallurgical Coal and a significant European steel mill.

Goldman Sachs has lifted its hard coking coal forecast by 5% to this price but still expressed some reservations in a recent commodities report.

“The fact that spot prices are currently below $315/t and demand is expected to weaken through 3Q11 [September quarter] makes us slightly suspicious,” it said.

“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.”

For low-volatile pulverised coal injection coal, AAMC recently struck a September quarter contract of $230/t FOB with Korean steelmaker Posco for its Foxleigh product, according to Japan’s steel sector newspaper Tex Report.

Goldman said that price represented a 16% fall from the June quarter for this commodity but was $5/t more than its forecast.

It said the reported deal with Posco was consistent with its view that demand for PCI coal had fallen due to lower Japanese demand.

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 PCI coal output.

It forecast a September quarter price of $214/t FOB for semi-soft coking coal.

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