No matter what the price of coking coal drops to, there is a clear long-term case for steel producers to vertically integrate at least some of their coking coal needs.
Cyclones will always happen, and when they do it affects contract price. Already this has produced something like a $30 contract price increase for the coming quarter(s), which will have added a lot of cost to buyers, especially ones mentioned in India that have allowed stockpiles to decrease in anticipation of a lower price this quarter - some unhappy Indian billionaires I suspect
It shouldn't take much more than an envelope calc in a 10-15 year timeframe to be able to show buyers for steel how buyer Lochinvar is the perfect arbitrage, mitigating against unforeseen/unquantifiable risk caused by extreme weather and other black swan events; especially at the cost of production expected for somewhere like Lochinvar - even if price fell to below production cost, they could put the mine into care and maintenance until the price rose above it again.
Roll on the roadshow.
No matter what the price of coking coal drops to, there is a...
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