Prices of spot coking coal coming into Asia and China moved
up due to lower supply of cargoes and recent heavy downpour in Australia. Some
of the major miners have now declared 'Force Majeure' on coking coal shipments.
Force Majeure is a common clause in contracts that
essentially frees both parties from liability or obligation when an
extraordinary event or circumstance beyond the control of the parties, such as
hurricane, flooding, earthquake, volcanic eruption, etc. prevents
one or both parties from fulfilling their obligations under the contract.
Currently, the Premium Low-volume material is quoted higher
at around $174/MT (FOB Australia). Whereas, 64 mid volume is around $158/MT
with Panamax freight costing about $15 to India.
Although in India, the sentiments are quite mixed. On one
side, where market was firm with Indian rupee getting stronger after the
Reserve Bank of India cut its lending rates and cash reserve ratio to boost
liquidity.
Few market participants are expecting prices of coking coal
to increase on the other hand. A mill source said that Indian mills were
concerned about the situation at Gladstone. If Force Majeure lasts more
than a month, some players may need to shift to the spot market for procuring
coal, the source added.
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