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Peabody, Posco settle Apr-Jun PCI at $141/mt FOB Australia, up $18/mt from Jan-Mar

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Peabody, Posco settle Apr-Jun PCI at $141/mt FOB Australia, up $18/mt from Jan-Mar

Coal miner Peabody and South Korean steelmaker Posco have signed aquarterly contract for low-volatile PCI coal for April-June 2013 at $141/mtFOB Australia, up $18/mt or 14.5% from the first quarter, buyer and sellersources in Asia and Australia said Wednesday.

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The deal at $141/mt FOB applies to Q2 loadings of Peabody's flagshiplow-vol PCI brand Coppabella, which had been sold at $124/mt in Q1.

Mid-vol PCI Century, meanwhile, was said to have been settled at $130/mtFOB, though this could not be confirmed.

Being between a major producer and consumer, the new settlement seemslikely to be considered a global benchmark for Q2.

Coppabella is considered a high-quality PCI brand globally, with around13% VM, 8.5% ash and 80 Hardgrove Grindability Index.

The deal could place PCI at 80% of premium HCC or above given widespreadspeculation in the market of a premium HCC settlement for Q2 at $172/mt FOB.

While PCI has achieved this level in the past, it is higher for Q2compared to the last seven quarters, when it was about 72-75%.

The narrowing of the spread between PCI and HCC prices reflects "supplyshortfalls and low margins for existing premium Low-vol PCI suppliers fromQueensland and Canada," a major PCI producer said Wednesday.

Another large PCI producer was surprised by the deal, seeing it ashigher than expected.

"That's a huge price. I'm surprised they agreed," he said, citing theongoing "correction" in Chinese spot import prices.

Spot low-vol PCI prices in China have fallen by close to 7% in the lastsix weeks, and were assessed Wednesday at $150/mt CFR China, or $134.50/mtFOB Australia, $6.50/mt below the new settlement.

Peabody Energy could not be reached for comment, while a Seoul-basedPosco spokeswoman refused to confirm or comment on prices.

--Julien Hall,

--Edwin Yeo,

--Edited by James Leech,