Wednesday, December 03, 2008
Nippon Steel Seeks to Cancel Iron Ore, Coal Shipments
| Wednesday, 03 December 2008 | |
| Nippon Steel Corp., the world’s second-largest maker of the metal, is asking mining companies to cancel some deliveries of iron ore and coking coal as it reduces production, two people familiar with the requests said. The company sought the changes after deepening its output cuts in the second half of the year because of falling demand, executives involved in purchases said. They declined to be named as talks are confidential. Sumitomo Metal Industries Ltd., Japan’s third-biggest mill, was also considering cancellations, spokesman Toshifumi Matsui said today by phone. Nippon Steel and rivals are reducing output as global market turmoil pushes countries from Europe to the U.S. and Japan into recession. BHP Billiton Ltd., partner in the world’s biggest coking coal exporter, and Rio Tinto Group may have to cut contract prices by a third next year because of slumping demand from steelmakers, according to a Bloomberg survey of analysts. “Not only us but most Japanese mills are considering cancelling iron ore and coking coal contracts,” Matsui said. Kobe Steel Ltd. was looking at shipment cancellations, spokesman Hiroyuku Hashimoto said today by phone. Japan’s crude steel output fell 2.7 percent in October from a year earlier, the first drop in 29 months, the country’s iron & steel federation said in a statement on Nov. 19. “From one month ago Japanese steelmakers started asking us to ship ore and coal at a slower pace,” Masafumi Yasuoka, senior executive officer at Mitsui O.S.K. Lines Ltd., said in a telephone interview. Mills sought a 5 day to 7 day extension to a return voyage that typically requires 20 days, he said. Australia, Brazil Steelmakers were seeking to cancel deliveries of iron ore from Brazil and Australia and coking coal from Australian suppliers, including BHP Billiton, according to the executives that declined to be identified. BHP spokeswoman Samantha Evans declined to comment. Marius Kloppers, the company’s chief executive officer, said on Nov. 27 he would inform the market if there was any serious change to its iron ore sales volumes. The coal unit would be affected if there were continued cutbacks in the steel industry, he said. As adapted from Bloomberg Rio Tinto Iron Ore spokesman Gervase Greene, Rio Tinto Coal spokesman Nathan Scholz and Xstrata Plc’s coal division spokesman James Rickards also declined to comment. Nippon Steel plans to lower output by about 2 million to 2.2 million metric tons in the six months to March 31, compared with the first-half, company President Shoji Muneoka said Nov. 25. Mine Production Rio Tinto Group, the world’s second-largest iron ore exporter, will cut output at its mines in Western Australia by 10 percent because of reduced demand, it said Nov. 10, following the lead of bigger Brazilian rival Cia. Vale do Rio Doce. Mining companies were receiving cancellation requests from all over the world, including from steelmakers in Japan and China, and may need to take legal action claiming contract breaches, one of the executives in Tokyo said. Long-term contract iron ore prices may drop 40 percent next year, UBS AG has forecast, while prices for coking coal may drop to $200 a ton in the year starting April 1, from $300 a ton this year, according to the median forecast of nine analysts surveyed by Bloomberg. The forecasts ranged between $140 and $305. Japan imported 140.7 million tons of iron ore and 84.7 million tons of coking coal in the fiscal year ended March 31, 2008, according to the Ministry of Finance. Source: Bloomberg |
