coking coal prices for japan to treble

This will give it a lift that it deserves as BHP is the main coal exporter to Japan and Japan is Australia's biggest coal customer.

Coking coal prices for Japan to treble

Coking coal prices for export to Japanese steel mills are set to more than treble to $US300 a tonne, The Weekend Australian Financial Review reports.

The increase will create a windfall for BHP Billiton and will add as much as $24 billion to Australia's exports this year, the paper reports.

Tight supplies will increase contract prices for the year beginning April 1, 2008 from $US98 in the fiscal year just ended.

Flooding after heavy rain in the Bowen Basin in Queensland has cut 11 million tonnes of production since Christmas. Seaborne exports of metallurgical coal, including coking coal, total about 210 million tonnes, according to the paper. Meanwhile, China's burgeoning steel production has been soaking up raw steelmaking materials throughout Asia.

A spokeswoman for BHP declined to comment on Saturday when contacted by Reuters. BHP has been in tense negotiations with Japan over the coal prices for months.

Japanese trade sources have said that BHP had been seeking a price rise to $US300 a tonne for coking coal but that the Japanese steel mills were reluctant to accept such a sharp price increase.

Spot cargoes of coking coal have been sold recently at prices as high as $US350 a tonne.

Coking, or metallurgical, coal is Australia's second largest export, after iron ore. The Australian Bureau of Agricultural and Resource Economics recently forecast that the value of coking coal exports in 2008/09 would double to $28 billion from $14.2 billion the year before.

It did not forecast prices. But a $US300 a tonne contract price for 2008/08 supplies would easily outstrip the bureau's forecast of additional export income for coking coal exports.

Australia is forecast to export 136.3 million tonnes of coking coal in 2008/09, so an extra $US202 a tonne on the price of the coal would add billions to the value of Australia's exports in the Japanese April/March fiscal year.

Australia is also involved in protracted negotiations with Asian steel mills for iron ore prices for 2008/09, with BHP Billiton and Rio Tinto pressing for price rises greater than the 65 per cent and 71 per cent, depending on grade, recently agreed between Asian steel mills and Brazil.

This is being resisted by Chinese and Japanese steelmakers.

Australia is also negotiating with Japanese power utilities for a big contract price increase for thermal coal, used to generate electricity.

Australia and New Zealand Banking Group commodities strategist Mark Pervan said the price rise would add about 20 per cent to the nation's terms of trades and pressure the local currency.