coal prices down

market has downgraded coal prices on the back of some small private deals done recently, however we will still need to wait a month or so to see how the new contract prices pan out. here is a quote from SMH:

"Separately, major coal producers will this week resist calls from Japanese steel mills for a steep cut in low-quality coking coal prices, despite growing concerns that producers are facing lower than expected settlement prices. Talks with Japanese steel mills in Tokyo on annual contract prices for so-called semi-soft coking coal resume this week with the steel mills expected to press the majors to accept cuts of up to 30 per cent. That is in line with a spate of small price deals reported late last year.

But the major producers are dismissing the recent price deals as irrelevant, setting the stage for potentially protracted negotiations.

"There appear to have been some minor settlements in the past month or so but none has been significant or have any bearing on the direction of the market," Xstrata Coal head Peter Coates told The Australian.

Last month, some small Australian producers reportedly agreed to about a $US25-a-tonne reduction in prices to around $US55 a tonne - a fall of just over 30 per cent.

Earlier, the market had been unsettled by rumours that new entrant Wesfarmers had agreed with South Korea's Posco to a 35 per cent price reduction for faster heating pulverised, or PCI, coal.

The rumour has weighed on the shares of major PCI producer Macarthur Coal, but chief executive Ken Talbot believes the rumoured price isn't a true reflection of the market.

"The customers are wanting to use those deals as a benchmark for the market, but the rest of the market hasn't followed and sees the true market position differently," Mr Talbot told The Australian.