Japanese steel makers accepts quarterly coking coal contract

Brisbane (Energy Publishing) - Major Japanese steel makers have reportedly buckled under pressure from BHP Billiton and accepted quarterly contracts for hard coking coal, marking a fundamental change in Japanese buying from annually negotiated contracts.

JFE Holdings, Japan’s second largest steel manufacturer, has accepted a price at or close to BHPB’s asking price of US$200/t for hard coking coal for the period April-June 2010, The Australian newspaper reports.

Other reports indicate Nippon Steel has also agreed to quarterly contracts with BHPB at US$200/t. The price represents a 55% increase on last year’s benchmark price.

While there have been some reports BHPB offered hard coking coal on an annual basis at a more expensive US$240/t, as an alternative to a short term contract, other sources have told Energy Publishing, BHPB at no time tabled a US$240/t price and has offered no annual contracts this year.

BHP said it has reached terms with a range of customers in Japan, India, China and throughout Europe for a significant portion of its hard coking coal volumes for 2010, “based on a structural change to shorter term market based pricing for the contract period”.

Energy Publishing’s CCQ © Index, prices spot hard coking coal as at 5 March at US$234/t FOB East Coast Australia.