Analysis: Is $160 FOB for Australian PLV Realistic?

Executive Summary:

PLV FOB prices are once again approaching the $160 mark, raising the question of whether such levels are realistic. In March, the market briefly touched $166 FOB due to year-end miner sales and European resells, but prices rebounded quickly as mine disruptions and strong Chinese term values near $180 FOB provided support. Today, however, the context is more bearish. Chinese steel mills are reselling FOB-indexed cargoes into a market already oversupplied with Australian, Canadian, and now Chinese low-sulfur PHCC. Chinese domestic prices have fallen sharply, with Q3 contracts expected around $160 FOB equivalent and spot already near $145–150. Buyers in Southeast Asia and JKT — typically PLV takers — now have access to cheaper Chinese alternatives, while European demand is absent. Though PMV remains firm due to limited spot supply, it risks being undermined if end users arbitrage by buying Chinese PLV and reselling Australian PMV. This could trigger a new wave of PMV resells, echoing the March selloff. Given the weaker fundamentals and absence of meaningful support, $160 FOB is not just realistic — it may be the next stress level.

Introduction:

As market weakness intensifies, the question on everyone’s mind is: can PLV prices really return to $160 FOB Australia? To answer that, it’s worth revisiting what happened the last time the market dipped into the 160s — and what’s different now.

When PLV Last Hit the 160s – March 2025

In March, FOB prices dropped to a multi-year low of $166 FOB, driven by:

• Year-end sales by Australian miners rushing to clear inventory

• Resell activity from European mills offloading excess tonnage

• At that time, Chinese term contracts were still priced around $180 FOB Aus equivalent, making $166 highly attractive

  
  

Outcome:

• A Chinese southern mill bought the $166 FOB cargo on index

• Market quickly rebounded by ~$25 to $195 FOB, following:

  • Three mine incidents that stopped the bleeding

  • Support from Chinese domestic prices, which formed a clear floor around $170 FOB

    
    

Now: A New Correction Underway

The current downtrend started right after the Singapore Coking Coal Conference, with a clear shift in market flows:

• Chinese steel mills began reselling their FOB-index-linked cargoes into the seaborne market as Oaky Creek recovered

  • First trade at $181 FOB

  • Recent offers now at $168–170 FOB

But this time, the backdrop is very different.

What’s Different in June vs. March?

1. Oversupply Focused on PLV

• Australian PLV availability remains heavy

• Canadian volumes continue to flow

• Chinese exports of low-sulfur PHCC have emerged

• PMV, on the other hand, remains relatively tight in spot availability

  
  

2. Chinese Domestic Fundamentals Are Weaker

• Q3 long-term contract prices are expected to land near $160 FOB equivalent

• Spot market already sits at $145–150 FOB equivalent (excluding 13% VAT for import)

• Chinese PHCC exports offered at ~$177 FOB China, netting to ~$170 FOB Australia (including 13% VAT for export) for SEA/JKT users

  
  

3. Demand Weakness from Traditional Buyers

• Southeast Asia and JKT buyers, typically key PLV importers, now have access to cheaper Chinese PHCC

• Europe is absent, offering no upside demand cushion

  
  

Implications for Market Dynamics

• PLV Index will remain under pressure, with the spread to PMV widening further

• PMV prices may stabilize temporarily due to:

  • Slower recovery in production

  • Limited spot availability

• But if Chinese-owned SEA end users start to arbitrage:

  • Buy Chinese PLV at ~$170 FOB equivalent

  • Resell branded PMV into the spot market

    ➤ We may see a repeat of the March fire sale, this time led by traders/end-users rather than miners

    
    

Conclusion: Is $160 FOB Realistic?

• The last $166 level was followed by a sharp rebound only because of domestic price support and supply disruptions

• This time, with no such support and weaker Chinese fundamentals, $160 FOB is not only realistic, it may be a temporary floor

• If arbitrage flows intensify, and demand fails to absorb new tonnage, we may even test levels below $160 FOB