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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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From: russwinter3/6/2005 11:36:38 AM
   of 110194
 
Asian Train Wreck du jour.

In 2001 when these guys started up the whole sell to the US below the cost of production ardor, coking coal was $27/tonne. Naturally China has to take this price as well. All these new contracts for iron ore and coke kick in April.

Japan Steel Majors Accept $125 for Hard Coking Coal for 2005

Japanese each major 5 integrated steel makers agreed on Friday with BHP Billiton Mitsubishi Alliance of Australia to increase purchase price of premium hard coking coal by 119% to FOB US$ 125 per tonne for fiscal 2005 starting April 2005 from previous year. Japanese steel accepted the record high price to keep stable operation under tight supply of coking coal.

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.
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