OREANDA-NEWS. Japanese steel producer Nippon Steel and Sumitomo Metal settled its third-quarter contract for Middlemount South's Foxleigh pulverised coal injection (PCI) grade at $127.50/t fob Australia, down from $135/t for the April-June quarter.

Most other PCI producers and northeast Asian steel producers are expected to follow the price established by Nippon Steel and Middlemount South for their own PCI contracts, participants said. But Japan's JFE Steel settled its third-quarter PCI contract with US producer Peabody Energy at $115/t fob Australia near the end of June before prices rebounded.

"JFE is the only major outlier among them, but it looks like they will get the best price," a Japanese trader said.

Other steel producers delayed settlement of their coking coal and PCI contracts until the end of August, so that a three-month average of hard coking coal spot prices from the June-August period could be used as guidance for PCI contract prices, the trader said.

The settlement of $127.50/t is about 75pc of the June-August average of premium hard low-volatile coking coal spot prices assessed by Argus at $169.47/t fob Australia, while near the low-volatile PCI spot price last assessed at $127.25/t fob Australia.