Japan Major Steels Get Lower Coking Coal Price from Elk Valley

Nippon Steel and other Japanese major integrated steel makers agreed to reduce purchase price of coking coal for fiscal 2006 shipment starting April with the world no.2 coking coal supplier, Elk Valley Coal Partnership of Canada by Tuesday. The detail is unknown but they apparently agreed to reduce the price in line with the agreement between Japanese steels and world no.1 coking coal supplier, BHP Billiton Mitsubishi Alliance (BMA) of Australia. The price negotiation for coking coal is getting toward decrease. Japanese steels try to conclude the negotiation with other Australian miners and Suppliers in China and Russia along with non-coking coal suppliers. Japanese steels agreed with BMA in late January to reduce the purchase price by 8% to around FOB US$ 115 per tonne for high-quality coking coal for fiscal 2006 shipment compared with previous year. They also agreed to differentiate the prices depending on the quality of coal types. Japanese steels negotiate with other miners in line with the agreement with BMA. Japanese steels will conclude the negotiations respectively with Anglo Coal of Australia, Peabody Energy of USA, Rio Tinto Coal of Australia, Xstrata Coal of Australia and other miners. The price negotiation for coking coal is to conclude for decrease. The price, which increased to 2.2 times in fiscal 2005 from fiscal 2004, decreased for fiscal 2006 marginally due to tight supply and limited supply sources. The price of non-coking coal and coal for pulverized coal injection is expected to decrease wider through the ongoing negotiation. Japanese continue to negotiate with the suppliers to find price move of thermal coal and price gap with thermal coal.