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Global coking coal market reacts positively to 'transparent' ArcelorMittal sell tender

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Global coking coal market reacts positively to 'transparent' ArcelorMittal sell tender

  • Author
  • Jeffery Lu
  • Editor
  • Adithya Ram
  • Commodity
  • Coal Metals

A coking coal sell tender run recently by ArcelorMittal represented a significant milestone for the market due to its unparalleled transparency, several market participants told S&P Global Platts in recent days, though they added that there was some room for improvement in some aspects of how the tender was run.

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ArcelorMittal conducted the sell tender for a cargo of premium hard coking coal Feb. 15. The tender process was supported by the Platts Market on Close assessment process. Market communication was facilitated through email blasts as well as a market notification subnote ( published before the tender.

On the day itself, Platts published individual headlines for each bid received, and for each price change. Price changes needed to align with incrementability rules. The headlines came out in real time on Platts Steel Alert and were also sent live to the market via email. The tender saw reasonable activity with bids received from six different companies. The end of the tender aligned with the Platts assessment timestamp, and a decision was made by ArcelorMittal at around 6 pm Singapore to award the tender to Glencore (

Coking coal is trading traditionally more opaque and it is rare for companies to willingly reveal their name. The ArcelorMittal tender eventually became the most transparent transaction in this market's history, with both counterparties eventually named.

"We remain committed to bringing more transparency to the metallurgical coal market," a senior procurement executive at ArcelorMittal said in an email to Platts in response to questions about the tender.

One of the market participants told Platts that "the whole tender process was in the legitimate interest of the market, for being the first and foremost transparent tender ever concluded in met coal pricing history."

One of the bidders involved in the tender said that the result was "well-aligned with the market development of the day," adding that the fixed-price components of $440/mt of the two highest bids, which were combined fixed and floating bids, showed that prices had been repeatable at that level.

Notwithstanding the overall positive feedbacks received, market participants also provided suggestions for improvement, including that the cargo was too prompt for some of them to participate, given an implied requirement for same-day vessel nomination.

Another feedback was that the market notice was too short as several market participants needed more time between the tender announcement and the tender itself to clear their internal approvals to participate.

In addition, there were also feedbacks about the length of the bidding period, and about the fact that communications via email could have been more efficient through other means.

Several traders who didn't participate this time said that they would consider participating in a transparent tender like this next time, but also argued that "a better understanding of the Platts price incrementability standards and the bid submission process would be important before participation."

"We ended up staying on the sidelines this time, because we were still trying to learn every detail of this [new] tender process," said a trader source.

The seaborne met coal market resumed its upwards trend in recent weeks as heavy rains across the eastern coast of Australia and the escalation of the Ukraine crisis affected key supply basins. The benchmark PLV FOB Australia hit an all-time high of $457/mt Feb. 24 and has hovered around that level since.

"The market seems supported but overall spot liquidity remains fairly low, transparent activities like the ArcelorMittal sell tender are appreciated since we get a clue of the market direction," added an Indian trader source.

S&P Global Platts assessed premium low vol steady at $457.00/mt FOB Australia, and CFR China steady at $395.00/mt CFR China Feb. 28.