Coking Coal Price Negotiation Starts in January

Japanese major steel makers and overseas raw material suppliers will start price negotiation of coking coal this month for shipment in fiscal 2010 starting in April. Raw material supply is tightening when steel output has rebounded worldwide and China has increased purchase volume of offshore raw materials. The spot price is now higher than the yearly contracted price in balance with Chinese domestic coal price. Global steel output is expected to increase in FY2010 from FY2009. Raw material suppliers show strong selling stances.

Global trade volume of coking coal is forecasted to increase by 7.9% to 232 million tonnes in CY2010 from CY2009, according to Australia Bureau of Agricultural and Resources Economics (ABARE). The volume is expected to increase by 6.4% in Japan, 15.9% in EU, 15.8% in South Korea and 12.0% in India.

In CY2009, Chinese coking coal import exceeded 30 million tonnes for January-November while its export was 600,000 tonnes. The net import exceeded 30 million tonnes. ABARE forecasts Chinese coking coal import would decrease by 20.6% to 27 million tonnes in CY2010 from CY2009. However, global trade volume in CY2010 is likely to be the level as high as in FY2008.

Australian raw material suppliers will increase coking coal shipment in CY2010 since they expanded the capacity of railways and ports in CY2009. Other suppliers in USA, Canada or Russia also seem to coking coal supply in response to expanding demand.

Chinese coking coal import would decrease in CY2010 because Chinese coal mines recover from the accidents in 2009. Meanwhile, Chinese domestic coal price was higher than the international price due to high productive costs at around US$ 200 per tonne in CY2009. In CY2009, international coal price widely lowered and China increased coal import.

Australian spot coal price currently seems around FOB US$ 170 per tonne, which reaches US$ 200 at the delivery to China. International coal price is closing to Chinese coal price.