Coking coal prices have been strong in recent weeks, especially on the volatile seaborne market, Kallanish notes. If supply issues are resolved however then prices should return to around $160/tonne fob Australia, according to Toshiharu Sakae, executive vice president of Nippon Steel and Sumitomo Metal Corporation (NSSMC).

NSSMC has shifted to a new pricing method for its coking coal contracts, which mean it will gain from lower spot prices much more quickly. The steelmaker came under increasing pressure to abandon the quarterly contract system after its quarterly contract prices jumped from $93/t fob Australia in Q3 2016 to $200/t the following quarter, then $285/t in Q1 2017. In Q2 it agreed to pay $194/t but from now on quarterly prices will be set at the average spot price over three months, with a one-month lead over the payment quarter. Over January-March for example, it would pay the average price for December-February.

"If the disruptions continue, coal prices may rise further as steel demand in China and India are both strong," Sakae told Reuters in an interview. Prices should sink back to $160/t when supply issues have been resolved however.

In China’s Pingdingshan last week prime coking coal prices were up around $5/t at $198/t. On the Dalian Commodity Exchange January 2018 coking coal settled up CNY 18.5/t at CNY 1,331/t ($199/t).