World’s biggest mining company BHP Billiton Ltd vide a release confirmed that it has agreed to sell coking coal on short term contracts to customers in Europe, China, India and Japan, breaking away from annual pricing. It’s the first time a three month supply accord for coking coal.
As per report UBS said on February 18th that “BHP offered customers three options for coking coal contracts. The first is for half of supplies to be priced annually and half quarterly, the second option is for supplies to be divided between quarterly and semi annual contracts; the third is for all prices to be set quarterly.”
Mr Jim Lennon of Macquarie in London said on March 5th that “The JFE coal settlement signals that the Japanese are moving toward the idea of flexibility of pricing. It’s pretty certain that you are going to see a similar development in iron ore.”
Coking coal and iron ore suppliers have in previous years held annual talks with steelmakers to fix benchmark prices for the 12 months from April 1, which is the start of the Japanese financial year.
The four decade old iron ore pricing system was fractured last year after Chinese mills failed to reach agreement with suppliers.