Posco settles 4Q PCI contract price at $145/t fob

South Korean steel producer Posco has agreed to a contract price of $145/t fob Australia for the October-December quarter with Australian producer Realm Resources for low-volatile pulverised coal injection (PCI) brand Foxleigh.

The settlement is up from $139.50/t fob Australia in the third quarter for the same brand. Posco and other northeast Asia steelmakers, including Nippon Steel and Sumitomo Metal (NSSMC), use a three-month average of premium hard coking coal index as reference for PCI negotiations.

The Argus index for premium hard low-volatile coking coal averaged $213.43/t fob Australia in the September-November period, up from the June-August average of $189.39/t referenced in third-quarter PCI contract price discussions.

"Suppliers were in a good position because the premium hard coking coal spot prices were also going up this week and they might have had support for PCI contract prices at $150/t very soon," a Japanese trader said.

Negotiations for fourth-quarter semi-soft coking coal contract prices between Posco and NSSMC and Australian producers — including Stanmore, Yancoal and Glencore — are expected to continue next week, targeting a settlement before the year-end holidays.

Japan's JFE Steel follows a separate price framework and has recently begun first-quarter 2019 PCI contract discussions. The company settled fourth-quarter PCI contract prices at $139/t fob Australia in September.

source: Argus Media