Metallurgical coal markets will bear close watching this week as Chinese traders return to work from the annual Golden Week holiday. The industry has been rocked by nearly 300% increases in spot prices for coal used in steelmaking since November 2015’s multi-year lows. Tuesday’s spot price of US$213.40 was relatively consistent during the Chinese holiday week. Mills in Europe and India drove most of the panic buying on global markets, and it appears that supply will continue to be tight. Australian producers will face tough negotiations as Japanese, Indian and Chinese steelmakers seek to sign new quarterly contracts for the steelmaking material. However, the burgeoning derivates market may point to a coming correction that would reverse the dramatic gains of the past couple of months. Platts’ Steel Index coking coal review notes that on October 5, the Premium Hard FOB Australia coking coal forward curve was backwardated out to the end of 2017 (see chart). The market remains divided, with some feeling that prices are “overcooked” and will correct in due time, while others feel that undersupply will continue to drive a bull market.