Yesterday’s decent Flash PMI helped spot iron ore to a slight rise of 60 cents to $132.40. Likewise 12 month swaps were up a touch to $114.12. However rebar average continued its entrenched slide, down 12 points to 3516. Futures did better. I still expect spot to follow.
In news, not much to report, except that the coking coal bounce has delivered it first contract upgrade:
Japanese steelmaker Nippon Steel & Sumitomo Metal Corp, set its October-December contract price for prime hard low-vol coking coals with Australian miners such as BHP-Billiton Mitsubishi Alliance and Anglo American at $152/mt FOB late Thursday, up $7/mt from Q3 for prime hard grade coals, several sources said Friday.
The price covers premium land low-vols such as BMA’s Peak Downs or Saraji and Anglo American’s German Creek coking coal. For premium mid-vols such as BMA’s Goonyella and Anglo American’s Moranbah North HCC, the deal was done at $148/mt FOB, up $6/mt from July-September.
The prices were mostly in line with market expectations, with most participants expecting a breakthrough in the mid-point of $150-155/mtFOB Australia.
Company officials at Nippon Steel and the mining companies either declined to comment or could not be reached Friday.
“It is a good outcome, but it should have been higher,” one market source said, adding that Japanese end-users were able to accept the increment in prices due to improved steel market conditions in the country.
However a Japanese source still felt that the number was slightly higher than expected.
When compared with Thursday’s spot price, the contract settlement was $0.50/mt lower than Platts Premium Low Vol assessment at $152.5/mt FOB Australia.
Coking coal has enjoyed a decent rally in the past few months, up from lows around $130 to $150 today on a Chinese restock. It’s possible we’ve seen the bottom for coking coal though with little global production as yet offline and new mines set to pump more output my bet is on another downside test next year.
