Japan Steels Accept Triple Coking Coal Price for F2008

Japanese integrated steel makers including Nippon Steel and JFE Steel agreed with BHP Billiton Mitsubishi Alliance (BMA) of Australia by Tuesday to triple the coking coal price for fiscal 2008 shipment from fiscal 2007. The price increases for the first time in 3 years hitting 2.4 times of former record in fiscal 2005. The wide hike could increase the coking coal cost by 1.5 trillion yen for Japanese steel industry. They agreed to increase the high grade coking coal price to FOB US$ 300 per tonne for fiscal 2008 starting April from US$ 98 in fiscal 2007. The price increased to 6.5 times in 5 years. The price jumped under worldwide short supply due to production trouble. Japanese steel makers accepted the extremely higher price to secure requirement for stable steel production. With the wide hike, cost of steel making raw materials, energy and freight could increase by 3 trillion yen for fiscal 2008 from fiscal 2007. The steel makers tries to reduce the cost structure through own effort to improve the productivity. However, they would try to pass the surging cost on steel selling price. Japanese steel makers try to increase the steel selling price by around 20,000 yen per tonne to cover higher cost for iron ore and other materials. However, with jump of coking coal price, they would seek additional hike on ongoing 20,000 yen hike.