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UPDATE 1-Nippon Steel agrees with Glencore, Teck on 43 pct rise in Q1 coking coal

Published 13/12/2016, 04:20 pm
© Reuters.  UPDATE 1-Nippon Steel agrees with Glencore, Teck on 43 pct rise in Q1 coking coal
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* Nippon Steel sets Q1 coking coal benchmark with Glencore , Teck Resources

* Q1 price surges to $285/T, highest in about five years

* Increase follows higher spot prices (Recasts with Nippon Steel's confirmation and details)

By Yuka Obayashi

TOKYO, Dec 13 (Reuters) - Japan's biggest steelmaker Nippon Steel 5401.T said on Tuesday it has agreed with Glencore Plc GLEN.L and Teck Resources Ltd TECKb.TO on a coking coal price for first quarter of 2017 supplies that is 43 percent higher than the previous quarter.

The companies agreed on a price of $285 a tonne for supplies of Australia's premium hard coking coal for the January-March quarter next year, a Nippon Steel spokeswoman said, without giving any details.

If other international steelmakers follow this price, it would be the highest industry quarterly benchmark since the fourth quarter of 2011.

Nippon Steel's agreements helps set a benchmark in Asia for supplies of coking coal, used in steel-making, which has nearly quadrupled in price over the past year as China cut production and reduced output at some mines.

"We can't comment on any more details as we are still negotiating with other suppliers," the Nippon spokeswoman said.

Nippon Steel's confirmation followed a statement from Teck on Monday that it agreed with major customers on a benchmark price of $285 a tonne for the first quarter of 2017 for coking coal. could not be immediately reached for comment.

In October, Nippon Steel and Peabody Energy BTUUQ.PK set the October-December coking coal contract benchmark at $200 a tonne. steel production and a policy directive from Beijing to limit domestic coal output has combined to send the price of coking coal sharply higher as China sucked up every available tonne from the seaborne market.

But these gains have been tempered in recent weeks as China, the world's biggest coking coal producer, recently reversed course and allowed mines to increase the number of days per year that they operate, partly in an effort to tame prices. Australian premium coking coal futures index traded on the Singapore Exchange SCAFc1 has risen 254 percent this year. It stood at $274.33 per tonne on Monday.

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