The US’s Patriothas sold “several hundred thousandtonnes in a balance of the yearagreement” of coking coal to a US customer at anFOB mine price (thoughtto be around $225/short ton) which is equivalent to over$300/t metric FOB port.Thesale is by far the most prominent of a series of US prices struck forallqualities which have surged over the last few weeks, powered notleast by thedisruption to high-vol supplies caused by the disaster at MasseyEnergy’s Upper Big Branch (UBB) mine.
Allhigh-vol qualities, low-vols and cross over high-vols have beenlifted,but in the absence of UBB coals, it is the high qualityhigh-vols that havebrought in the best prices. In a topsy-turvy market,high quality low-vols,normally selling at a premium to high-vol coals,are now trailing at "only"$240-245/t FOB port.
US prices are alsobeing driven upwards by the recovering steel production intraditionalexport markets and the emergence of buyers from Ukrainian, PolishandRussian steel mills. Russia’s Novolipetsk - an on-againoff-again importer - has taken coal from both Alpha (as it hasin the past) but also, it is believed, Arch’s Mt. Laurel.
"We were fortunate," said Patriot’s Bob Bennettof the$300/t-plus price, "but in truth this reflects the state of thehigh-vol market.And if any of the overseas customers want this sort ofproduct from USproducers, this is the kind of price they will have topay".
Bennett’s view is that recovering demand is in danger oftotally outstrippingthe ability of exporters to supply. "We have much,much more demand than we havecoal."
The price paid was for Patriot’s prime product, the 31.50%-32.25% vol Harrisbrand.
Butthe company’s other brands are also being lifted by the risingtide,reflecting a revived interest in all qualities of US met coal.While Harrisremains its Grande Cru its supply is a tight 900,000t.Wells’ Premier Cruhigh-vol, taken by Usiminas, is commanding an unaccustomed$240-245/t FOB port price currently.
Bennett’sperception is that much of the PCI that was being sold out of theUS hasnow moved over into a semi-soft market, commanding significantlyhigherprices. If the coals have some coking qualities, they can expect$220/t FOBport, as PCI coals they can command $190-200/t FOB port. Twomonths ago US PCIstruggled to breach the $115/t FOB port ceiling.