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First-Quarter Coking Coal Benchmark Set at $165 a Metric Ton

BHP Billiton Ltd., the world’s biggest coking coal exporter, settled the first-quarter benchmark contract for the fuel at $165 a metric ton, down 2.9 percent from the fourth-quarter of this year.

The BHP/Mitsubishi Alliance, or BMA, agreed to the lowest price since contracts shifted to quarterly settlements from annual pacts in the first quarter of 2010, Doyle Trading Consultants LLC, a New York-based energy research firm that specializes in coal, said today.

Companies from Appalachia to Australia have tempered output in an effort to stem a decline in prices. The benchmark, set at $170 for fourth-quarter 2012, is down 50 percent from the record $330 a metric ton set in the second quarter of 2011 after floods in Queensland, Australia, ravaged production.

Ruban Yogarajah, a spokesman for BHP in London, declined to comment, citing company policy.

“It is becoming increasingly clear coking coal has bottomed,” said Ted O’Brien, a New York-based vice president at Doyle.

Prices for the steelmaking component may rebound to $185 a metric ton by the fourth quarter of 2013, he said.

“We expect pricing at these levels to induce further production cuts, but may lead to a faster recovery in 2013,” Daniel Scott, an analyst at Dahlman Rose & Co. in New York, said today in a report.

U.S. producers may fetch lower returns than the benchmark because of lower demand in Europe compared to the Pacific region, O’Brien said.

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