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“This is a level which should see a supply reaction, including from Chinese domestic supply, and with key ex-China regions stabilising, we still expect a rebound to $179 per tonne average in 2014,” the bank said in a research note late on Monday July 15.
The fourth-quarter price expectation marked a 14.7% cut from Macquarie’s earlier forecast in April.
“We believe major Australian producers will keep contract prices at current levels until 10-15 million tpy of US swing tonnage exits the market, which, given the loss of US competitiveness from currency moves and the degree of current cash burn, seems inevitable,” the note read.
The bank added that Australian producers are increasingly seeing their US peers as “unwanted guests in their Pacific Basin home”.
Macquarie forecast fourth-quarter semi-soft coking coal and low-vol pulverised coal injection (PCI) coal to also roll over at third-quarter levels of $105 per tonne and $122 per tonne fob Australia respectively.
The third-quarter hard coking coal benchmark of $145 per tonne fob Australia was $27 lower than that agreed for the June quarter.
Last week, Metal Bulletin’s coking coal indices stood at $139.53 per tonne cfr Jingtang for low-vol materials and $127.49 per tonne cfr Jingtang for mid-vol materials.
Investment bank Macquarie expects the fourth-quarter benchmark price for hard coking coal to roll over at $145 per tonne fob Australia.