The settlement between the largest coking coal import country of Japan and the largest coking coal supplier is expected to standard of the other negotiations between steel makers and coal suppliers in the world.

The cost up of purchase price for raw materials, energy and freight for Japanese steel industry could increase in fiscal 2005 more than estimated over 700 billion yen of cost up in fiscal 2004.

The settlement price is more than double of FOB US$ 57 per tonne for fiscal 2004 and well above historical high of US$ 66 in 1982. Suppliers seek higher price aggressively under tight supply of coking coal with strong demand in China. The annual contract price is a bit less than around US$ 135 of current spot market price of coking coal.

Japanese integrated steels cannot meet increasing demand despite of the full capacity operations. High quality coking coal, of which supply is especially tight, is indispensable for them to keep high-level operation as raw materials for high quality coke. Japanese accepted the "unprecedented" high price with "great pain'' to secure requirement.

Japanese integrated steels continue price negotiation for coking coal for fiscal 2005 with coal miners of Australia, Canada and others. They are expected to agree in line with the settlement. Japanese will negotiate with miners for new prices for non-hard coking coal and coal for pulverized coal injection, which are FOB US$ 41 tonnes per tonne and US$ 45 for fiscal 2004.