Measuring the terms of trade crash

Tuesday, 20 June 2017

Via Macquarie:

Media reports suggest Japanese steel mills have concluded 2Q contract met coal prices at $135 per tonne for PCI materials and $126 per tonne for semisoft coal, down from $180/t and $171/t respectively in 1Q. As we wrote earlier, HCC contract prices already appear to have switched to an index averaged price, with the 2Q price paid by mills looking to be in the order of $190/t, a substantial fall from the $285/t price in the last benchmark settlement for 1Q. Spot prices meanwhile continue to fall, with Metal Bulletin reporting their premium HCC index below $140/t today, the lowest since September 2016.

And the chart:

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.