Realism seems to dawning on coking coal miners across the globe on the eve of Q4 negotiations as market players are weary of blood bath in twilight of 2012.

International traders are sitting in the weeds gauging the outcome of slugfest between the miners and steel producers in Korea and Japan. Since mills in these countries set the tone for quarterly contract prices which is higher than the spot levels.

In view of the abysmal conditions in finished steel demand in China, Europe and India, the onus will be on the miners. In hard coking coal the levels are likely to settle USD 20 per tonne to USD 30 per tonne less. Current spot levels being at USD 165 per tonne to USD 170 per tonne, CNF the contract levels might settle at USD 180 per tonne to USD 190 per tonne. Like wise in lower grade coking coal the prices are likely to touch USD 140 per tonne to USD 150 per tonne CNF.

Despite tepid demand and pessimism there is lurking fear in the coking coal buyers about the Quarterly Benchmark settlements which Australian coal producers have been achieving in Japan and Korea. If the miners are again able to notch impressive numbers it will be perilous for Indian buyers who have been sitting on the fence all through expecting cheaper deals.

Option of US supplies fading out with production pruning in USA owing poor domestic demand and underselling export cargoes there is faint possibility that they might have to put more balls in the Australian basket. Moreover Indian buyers are more in sync with the Australian quality parameters vis-à-vis US entailing propensity for pacific coal.

Source - Strategic Research Institute

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