See benchmark coking coal prices at $330/t: Gujarat NRE

In an interview with CNBC-TV18, Arun Kumar Jagatramka, managing director of Gujarat NRE Coke said coking coal prices have touched record levels of USD 330 per tonne from the previous contract high of USD 305 in 2008. "USD 330 per tonne would be the benchmark for April-June quarter trade," he said on the quarterly pricing.

However, he does not expect much divergence in spot price unless and until there is any event such as spurt in demand or disruption to supply, which he says seems unlikely.

Below is the verbatim transcript of Jagatramka's interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying video.

Q: Some price contract has been settled off late between BHP Billiton and Tech Resources. Could you just take us through what global developments have been like and what kind of price benchmarks are you seeing now?

A: Last Friday we heard that Anglo has settled the prices for April-June quarter for the hard cooking coal at USD 330 with few Japanese steelmakers. This price is almost USD 100 up against USD 225, which was the price for the current quarter.

I am not aware if BHP Billiton has settled. BHP Billiton has been insisting on monthly pricing while these buyers have been insisting on quarterly pricing. It will take a while, for one of them to settle down either monthly or quarterly. Others are actually settling around this USD 330 mark.

Q: This USD 330 is been seen as a record price. Would you imagine that all contracts would be signed at this level?

A:  It is a record price, because the previous contract high was USD 305 in 2008. This is higher than that price and is lower than the spot price in the last month which was at around USD 360- USD 380.

This USD 330 - USD 340 is a mark where spot prices are hovering. Because of this divergence in spot price and contract price, last year all the coal supply decided to go for quarterly pricing while BHP is trying to go for monthly pricing. According to me, quarterly is better than going for monthly.

Q: What is the situation in areas like Queensland now? Does the market have a handle on how much supply has been disrupted by and for how long the impact will be felt?

A: The floods in Queensland have more or less receded. The damage that has been done will take may be a few more months to recover. By end of March you can say the wet season would be over. Most of the mines may take another few months to come back to normal.

Q: So what are your expectations from the spot price front, you expect it to hover northwards of USD 300 now, sustainable for few more months?

A: Spot prices in cooking coal are not that relevant from a trading perspective, because there are very few trades. Most of it, around up to 90% of the trade is done through the contract prices, and on long term contracts.

For trade during this April-June quarter the quarterly prices of USD 330 would be the benchmark. You will not see much divergence in spot price unless there is a new event either a sudden high demand for the steel industry, or a further disruption to supply which seems unlikely.