Japan Steels to Start Coking Coal Price Talks for F2008

Japanese major steel makers including Nippon Steel and JFE Steel start talks with coal suppliers in the week toward coking coal price negotiation for fiscal 2008 shipment. They already started talks with some miners and have major talk with world largest coking coal supplier of BHP Billiton Mitsubishi Alliance (BMA) on Friday. They apparently exchange the views on supply and demand condition. The negotiation could be severe for the steel makers when the world supply is tight partly due to higher import by China and Australian infrastructure bottleneck.The buyers and BMA apparently don’t start price negotiation in the talk. They exchange the views on price influencing factors including supply and demand outlook and mining and steel industry condition. The steel makers share the view that coking coal supply is tight. The buyers recognize the price change should be moderate based on long term relationship while the miners are more aggressive in recent years as BMA offered 2.2 times hike for fiscal 2005.Annual negotiation price between Japanese steel makers and BMA is standard for Asian market. They agreed to reduce the price by US$ 18 to FOB 98 per tonne for premium coking coal for fiscal 2007 from fiscal 2006, which decreased to less than US$ 100 for the first time in 3 years.