Strongly Coking Coal Price Stays in High Level

Japanese integrated steel manufacturers such as Nippon Steel reached an agreement in the original coal price negotiations for the shipping in fiscal 2006, the year that ends in March 2007, with BHP Billiton & Mitsubishi Alliance (BMA) and the biggest coal supplier, by Thursday, that Japanese integrated steel manufacturers reduce the purchase price of No.1 strongly coking coal by around 8% over the previous year. Japanese integrated steel manufacturers called substantial lowered price to BMA because the price was extraordinary high in the shipping in fiscal 2005. However, since the place to obtain of No.1 strongly coking coal was limited, the good coking coal that the supply and demand is tight continued the historical high price.It seems to follow that this agreement by the biggest supplier and the biggest buyer become baseline of other coking coal price negotiations in the world. It was like that No. 1 strongly coking coal price for the shipping in fiscal 2006 declined to around 115 dollars per tonne for FOB by around 10 dollars over the previous year. They agreed price reduction for the first time in 3 years in the steel makers in the world except China, and the coking coal supply and demand become easing.But the supply and demand of No.1 strongly coking coal was tight. Consequently, the range of reduction by them was restrictive. That agreement price exceeded sharply the record 66 dollars per tonne of fiscal 1982 and became twice as much as the price for shipping in fiscal 2004.In the price negotiations for the shipping in fiscal 2005, No.1 strongly coking coal price hit the ceiling under tightness of the supply and demand. Japanese integrated steel manufacturers called to BMA that the quality of the coking coal reflect the coking coal price and agreed with BMA to reflect the quality to the price. Japanese integrated steel manufacturers want to promote the negotiations with other coking coal supplier on the price with BMA.Japanese integrated steel manufacturers are advancing the price negotiations of the coal for Pulverized Coal Injection and coking coal to reduce the purchase price. It seems that those coal prices would drop greatly since the supply and demand of it become easing clearly unlike strongly coking coal.As for the iron ore whose demand in China is strong, the suppliers are eager to perform the price hikes. Furthermore, zinc and transportation fuel market prices, etc. are rising dramatically. If those prices would increase, there is some possibility that the material and fuel purchase costs of Japanese integrated steel manufacturers in fiscal 2006 would jump up than fiscal 2005.