Japanese steel mills have obtained price cuts of $5 to $6 a metric ton from some Australian and Canadian coking coal exporters in the first contracts settlements for the next fiscal year.
U.S. and Japanese trading sources said the agreements establish a benchmark price that U.S. suppliers of high quality coking coal will find difficult to match.Under the new pacts, the price the steel mills will pay for coal delivered during the Japanese fiscal year, between April 1987 and March 1988, will fall to about $43 to $44 a metric ton from this year's level of about $48 to $49 a metric ton depending on quality.
The agreements also require substantial reductions in the amount of coal the mills will import, trading sources reported.
Given the rate of exchange between the Australian and U.S. dollars, the price cuts work out to about $2 a metric ton for Australian suppliers, industry sources pointed out.
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A U.S. congressman is renewing complaints that Brazil's steel industry, which accounted for about 10 percent of all U.S. coking coal exports in 1986, is being treated unfairly by U.S. trade policy makers.
Rep. Nick Rahall, D-W.Va., told U.S. Trade Representative Clayton Yeutter in a Jan. 15 letter that as a result of steel trade restraint agreements, Brazil's share of the U.S. finished and semi-finished steel market is falling while Japanese and European shares are on the rise.
Rep. Rahall said it appears that the trade office is awarding countries that have dramatically reduced their purchases of U.S. coking coal with increased shares of the the U.S. steel market. I strongly urge you to give serious consideration to rectifying this situation, he added.
The congressman also recommended that Brazil be awarded South Africa's share of imported semi-finished steel tonnage currently being reallocated as a result of economic sanctions enacted by Congress late last year.
In the earliest coking coal negotiations this year between U.S. suppliers and Brazilian steelmakers, Peabody Development Co. and U.S. Steel Mining Co. have offered prices ranging from $47.85 to $48.50 a metric ton on 5 percent to 6 percent ash coal, according to U.S. sources. The offers weren't confirmed by the companies.
The most talked about U.S. spot market transaction in the last two weeks is the sale of low-volatile, 5 percent ash coking coal via the U.S. East Coast to Cockerill, the Belgian steelmaker.
Most U.S. trading sources report the deal was made by the steel division of USX Corp. at a price of $46 or $46.50 a metric ton. A European source contends the price was lower for a higher ash coal.
USX declined to comment about the transaction.
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Efo, the Swedish coal buyer for 11 municipal utilities, is evaluating bids on coal to be delivered in the second half of this year.
U.S. coal is competing against Colombian and Australian offers on deliveries that could amount to about 600,000 metric tons.
U.S. exporters sold only one or two cargoes to the Swedish buyer during the last two years but are in a better position this time around. Due to a change in Swedish tax law, Efo has greater demand for higher calorific content U.S. coal, an Efo coal purchasing official explained.