coking coal at $200/tonneCoking Coal
JFE accepts BHP’s US$200/t quarterly offer price
Bloomberg is reporting this morning that JFE Holdings Inc.’s steel unit has
accepted
the US$200/tonne FOB quarterly offer price from BHP Billiton Limited (BHP –
NYSE; BHP – ASX) for April-June contract deliveries of premium hard coking
coal.
This is the first time that a contract for the Japanese steel mills has been
priced on a
quarterly basis, rather than the traditional annual pricing period.
McCloskey’s reports
that BHP’s settlements began late yesterday with an agreement from Nippon
Steel
Corp., followed today by settlements with JFE, Sumitomo Metal Industries
Ltd.
and Kobe Steel, Ltd.
The US$200/t quarterly price represents a 55% increase from the US$128-129/t
FOB
headline price for the last coal year (April 1, 2009 to March 31, 2010) and
compares to
recent spot prices for hard coking coal that have been reported as high as
US$220-
225/t FOB.
It remains unclear whether some contract deliveries may still be priced on
an annual
basis. It had previously been rumoured that BHP had been intending to table
an
annual price of US$240/t, with several options for tonnage to be priced at a
mix of
annual, semi-annual and quarterly rates, although it’s now believed that
only the
quarterly price may have been offered.
The fact that the Japanese steel mills accepted BHP’s quarterly offer price,
without
negotiating it lower, illustrates the bargaining power in the hands of the
coal
producers this year.
Analyst Coverage: Mike Plaster, Haytham Hodaly