met coal mayhem..

from Mac Bank research this morning..

Metallurgical coal remains in chronic short
supply as contract price still unsettled

Of all the markets we cover, metallurgical (met) coal (aka
coking coal) is probably one of the tightest. Disastrous
disruptions to supplies in the Ukraine, China and
Australia have plunged the market into a massive
shortage, one that can only be resolved by reduced
usage by the steel industry.
Coking coal is used to make coke and coke in turn is
added to iron ore in the blast furnace to make pig iron.
Small quantities of coke are also used in other industries
such as the production of ferroalloys. Metallurgical coal
includes coking coal plus coals that are injected directly
into the blast furnace (PCI or pulverised coal injection).
The global production and consumption of metallurgical
coal is close to 900mtpa but the segment that most focus
is on is the seaborne traded segment, which totalled
around 220mt in 2007.
The coking coal market is primarily an annual contract
market (like iron ore) with prices normally settled in the
December–March period for the contract year beginning
April 1. In recent years, small spot market prices have
developed along-side the annual contract price. After
falling in 2005 to late-2006, spot prices have rallied
massively to stand at around $330/t fob, over three times
higher than the current benchmark contract price for lowvolatile
hard coking coal of $98/t fob.