[miningmx.com] — BHP Billiton has notified major Japanese steelmakers that from April it wants monthly pricing of metallurgical coal to replace quarterly pricing, the Nikkei business daily said on Friday, citing unnamed sources.
The company wants to benefit from higher prices for steel-making coal, the newspaper said, adding steelmakers oppose the switch, fearing frequent price changes would make production costs more volatile.
Nippon Steel Corp, the world’s fourth-biggest steelmaker, and JFE Steel Corp, the No.5, declined to comment. Sumitomo Metal Industries and Kobe Steel said they had not received any such notice from BHP.
A shift in pricing would likely further squeeze steelmakers, which have already been reeling from a steep fall in profit margins since they adopted quarterly pricing for major inputs of iron ore and coal in April last year.
“A shift, if that happens, will further boost volatility in product prices and will be a big hindrance to mills,” said Takashi Murata, an analyst at Daiwa Securities Capital Markets Co.
“The only thing mills can do is boost their self-sufficiency of inputs such as coal and iron ore to more than 50% as soon as possible.”
Surging demand for steel-making coal from China gives BHP, which controls a fifth of the seaborne coking coal trade to Japan, the upperhand in negotiations.
The Nikkei said BHP requested prices be set monthly for most of the coking coal that Japanese companies buy, with explanations about price levels, calculation methods and other details expected to be provided later.
