Contract coal price negotiations have pretty much settled with the main outcomes at $US55.60 per tonne for thermal coal – up $3; $97/t for coking coal – down $18; $70-73 for semi-hard – down $16; and PCI coal unchanged at $65-67.

Smaller semi-soft producers settled around the $63 mark (up about $5), but brokerage Citigroup said it is understood Rio Tinto and Xstrata are holding out for $64-65.

“Lower value coking coals fared well, thus PCI and in particular semi-soft coals achieved much better prices than hard coking coals,” Citigroup said.

“The premium of semi-soft to thermal increased to $9/t, from $5.50. Historically it has been $2.”

Citigroup attributed the favourable semi-soft and PCI prices to Europe increasing its PCI ratios and Korea increasing its non-hard metallurgical demand – up 3% over the past two years to make up 20% of its metallurgical coal consumption.

“In India and China, increased use of local semi-soft coals reduced dependence on imported hard coking. In Japan, however, technical limitations restricted such a marked shift,” Citigroup said.