and another

(Adds Nippon Steel, POSCO chairmen comments)
By Yuko Inoue
TOKYO, April 9 (Reuters) - Nippon Steel Corp said on Wednesday it would pay BHP Billiton Mitsubishi Alliance (BMA) $300 a tonne for coking coal in the business year that started on April 1, triple what it paid the world's top coking coal producer last year.
The agreement is the latest piece of bad news for global steelmakers, which are already seeing their earnings dented by higher freight costs and soaring prices of other raw materials such as steel scrap and iron ore.
Costs for the entire Japanese steel industry could now balloon by more than 3 trillion yen ($29 billion) this business year, topping an earlier estimate of 2 trillion yen, said a spokesman for Nippon Steel, Japan's top steelmaker.
Nippon Steel said it would pay $300 a tonne under the long-term contract for this financial year, up from $98 a tonne in the year ended March 31. It declined to specify the type of coking coal.
"We had never anticipated such a huge price increase," Nippon Steel Chairman Akio Mimura told a group of reporters. "We need to gain understanding of our customers (for price increases)."
BHP Billiton Ltd and Japan's Mitsubishi Corp separately said in statements that their joint venture BMA had agreed with Japanese steelmakers on price rises in a range of 205-240 percent over 2007 levels for Peak Downs and other similar BMA coking coal products produced in Queensland.
The price hike comes on top of a 65 to 71 percent jump in the price of iron ore, another important raw material, that Nippon Steel has agreed to pay Brazilian miner Vale.
Some analysts expect Japanese steelmakers, along with South Korea's POSCO and Taiwan's China Steel Corp, to face stronger cost pressures due to heavier reliance on imports of raw materials than rivals such as ArcelorMittal.
ArcelorMittal, Chinese and Russian mills rely more on iron ore and coal from their own mines or from domestic mines, less exposed to surging freight costs.
The Baltic Exchange's chief sea freight index for global raw materials trade hit a record 11,025 at the end of October 2007, compared with 870 in early 2002, reflecting strong demand from China and emerging economies.
A stronger yen could also take a toll on Japanese steelmakers' earnings in the new business year as it will make steel, cars and other finished products more expensive in overseas markets, which could cool demand.
While Mimura said Nippon Steel had no plans to start making heavy investments in mines, POSCO Chairman Lee Ku-taek said the company aims to hold a certain amount of raw material supplies from its own mines to stabilise its business.
Lee was in Japan for a charity event co-sponsored with Nippon Steel.
Nippon Steel, which expects its first profit decline in six years for the year ended March 31, will unveil earnings forecast for the 2008/09 business year on April 25.
Mitsubishi, which owns 50 percent of BMA, said it would reveal its earnings forecasts on April 30 after taking into account the effect of higher coal prices. ($1=102.55 Yen) (Editing by Will Waterman) BusinessLatest news on guardian.co.uk
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