TOKYO May 17 JFE Holdings Inc, Japan's
second-biggest steelmaker, aims to buy more coking coal outside
of Australia to offset price risks for the steel ingredient that
were made evident by a big cyclone in March, its president said
"The biggest reason for volatility of coking coal prices is
geographic risk, with a major part of global production coming
from the east coast of Australia," JFE President Eiji Hayashida
told a news conference.
"We want to diversify our procurement sources to areas
including Mozambique, Russia and Canada," he said.
The price of coking coal has been volatile for more than a
year, nearly quadrupling between March and late November 2016,
and then halving over the next four months to end-March 2017.
March brought a new twist, though, when Cyclone Debbie hit
eastern Australia, cutting rail lines in the world's biggest
coking coal export region and sending prices gyrating up and
down once again in April.
Japanese steelmakers, which bought 71 percent of the 59.9
million tonnes of coking coal they consumed in 2016 from
Australia, were forced to scramble to get material from the
United States, Canada and China to replace supply lost or
delayed due to the cyclone.
Hayashida said miners in Australia needed to be better
prepared for the cyclones that frequently hit the area.
"We strongly hope that miners will make more efforts, such
as reinforcing infrastructure, to mitigate impacts from natural
disasters," he said.
Five miners in the cyclone-hit region, including BHP
, and Glencore had to invoke force
majeure - a clause typically invoked when producers cannot meet
contracts due to natural disasters - as multiple landslides and
flooding knocked out major coal rail networks.
Most rail links have been restored, but vessels loading coal
from Australia's Bowen Basin could be facing delay for another
couple of months before shipments return to normal.
Hayashida also said JFE was still set to build a steel plant
in Mexico with U.S. company Nucor Corp, although it is
closely watching U.S. policy because of President Donald Trump's
threats to tear up a regional trade pact.
"To be honest, we have no idea what policy the U.S.
government will adopt, but we may see a hard line given the
current cabinet members related to trade," Hayashida said.
Earlier this month, U.S. trade officials said their
anti-dumping and subsidy probe found carbon and alloy steel
cut-to-length plate from eight foreign producers including Japan
harms American manufacturers, locking in duties on the imports
for five years.
(Reporting by Yuka Obayashi; Editing by Tom Hogue)