Resource News

Maanshan Steel’s Coal Imports to Rise; Buys From BHP (Update1)

 

March 10 (Bloomberg) — Maanshan Iron & Steel Co., the second-biggest Chinese steelmaker listed in Hong Kong, will increase coking coal imports this year, adding to rising global demand that’s sent prices soaring.

The mill bought between 800,000 metric tons and 900,000 tons of the raw material from BHP Billiton Ltd., the biggest exporter, last year, Chairman Gu Jian Guo said in an interview. “Imports from BHP will likely be sustained,” he said.

Coking coal imports by China, the world’s largest steelmaking nation, surged fivefold last year after the government closed smaller unsafe mines. BHP last week won a 55 percent price increase from Japan’s JFE Holdings Inc. as the global economy picks up and Chinese purchases bolstered demand.

“Our demand for imported coking coal will increase this year,” said Gu. “The exact import level will depend on domestic and overseas prices. If prices are low, everyone will be buying from that market.”

Prices for coal bought from BHP are negotiated privately and don’t follow benchmark contracts set between Japanese mills and the mining company, he said.

China will demand more high quality hard-coking coal in the future as it expands mills, Melbourne-based BHP Billiton said in a September slide presentation. The nation last year filled a demand gap for the coal, it said.

Chinese Imports

Imports by China jumped to 34.4 million tons in 2009, up from 6.85 million tons in 2008, Wu Xinchun, a consultant to the China Iron & Steel Association said Feb. 5.

“China’s closure of small coal miners will add to the need for imports,” said Mu Wenxin, head of coal and coke research at research company UC361.com, “International prices are currently higher than domestic ore, deterring some buying interests.”

The BHP Billiton Mitsubishi Alliance, a venture between BHP and Mitsubishi Corp., raised coking coal prices to $200 a ton for the three months starting April, up from annual prices of $129 a year ago, JFE said.

“Prices will gain as commodity markets are rising,” said Maanshan’s Gu.

Import demand by China, the world’s biggest coking coal buyer after Japan, may rise to 38 million tons in 2010, Macquarie Securities Group analysts wrote in a Dec. 15 report.

“As global steel demand returns to healthier levels, the seaborne coking coal market is likely to remain tight in the next few years, with China remaining a net importer in the long term,” Jing Ulrich, chairwoman of China equities and commodities at JPMorgan Chase & Co. in Hong Kong, wrote March 8.

The Chinese government started closing small coal mines in 2008 to improve the industry’s safety record after 3,770 workers were killed in 2007, making the mines the world’s deadliest…read more at the Bloomberg

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