Friday, 11 Mar 2011
Nikkei business daily yesterday reported that Japan’s No 4 steelmaker Nippon Steel and British mining giant Anglo American Plc have agreed to increase coking coal prices for the second quarter by around 50% from the current quarter,
The Nikkei, without citing sources, said the coking coal price would be raised to a record USD 330 for the April to June period. Nikkei said that the steelmakers are worried that monthly price revisions would lead to cost volatility and this has led to the agreement with Anglo American which offered to set prices quarterly.
Steel makers across all parts of globe, citing surge in costs of iron ore and coking coal, have hiked steel prices in last 3 months. Now the big question is that weather the hikes are sustainable ie to what extant steel makers would be able to post the higher costs to buyers and what would be the steel price scenario in April to June quarter.
While the miners remain upbeat on prices of iron ore and coking coal in April to June quarter, several factors are weighing heavily on steel prices. Chinese premier has recently emphasized that the government will take all measures to cool down economy. This is being reflected in Chinese domestic prices, which have been sliding every day since February 22nd 2011. Political unrest in Middle East and North Africa has compounded the problem as many of the captive export markets for Black Sea based and Turkish mills have suddenly vanished creating a vacuum, forcing them to find alternate destinations.
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