Steel prices are set to rise further with the recent 55 per cent jump in benchmark international coking prices. In the last two months, steelmakers have hiked prices twice by about Rs 600 a tonne to pass on the incremental production cost to end users. Japanese steel major JFE Steel had signed a coking coal contract at $200 a tonne for supply between April and June as against $129 a tonne in the same period last year.

QUARTERLY CONTRACTS
"For the first time in last few years, mining companies have pushed in for a quarterly contract pricing, which indicates that the benchmark prices could be reset higher and can have greater linkage with spot market prices," said a steel company executive. With the prospect of demand improving in the coming days, steel companies would be able to pass on the incremental cost to consumers, he said. A Delhi-based trader said as such steel prices were already quoted at a premium over the manufacturers' list price as the market was looking forward to further price rise in the days ahead. Global mining major BHP Billiton has been persuading steel manufacturers to consider contracts of shorter tenure for both coking coal and iron ore. It has given different price options ranging from quarterly to a combination of annual and quarterly contracts. Given that global steel demand is expected to improve from the current levels, raw material prices too will be on an upward path. Hence, frequent resetting of prices will favour miners, Ms Chandrani De, research analyst, Ambit Capital. "On an average, global steel prices need to go up by five per cent to counter the recent higher-than-expected coking coal prices. The expectation of good steel demand will largely ensure that the incremental costs are absorbed through further price rises," she added.

                     ORDER
          New Delhi; the 9th February, 2010

S.O. 308 (E)--In exercise of the powers conferred by Section 14 of the Bureau of Indian Standards Act, 1986 (63 of 1986), the Central Government hereby makes the following further amendment in the Steel and Steel Products (Quality Control) Second Order of Government of India in the Ministry of Consumer Affairs, Food and Public Distribution (Department of Consumer Affairs), published in Part II, Section 3,Sub-section (ii) of the Gazette of India, Extraordinary, vide number S.O. 2173 (E), dated the 9th September, 2008, namely :-

In said Order, the Schedule, in column (I), Indian Standards 648, 3024, 15391, 2002, 2014, 2830 and 2831 and entries relating thereto in Column
(2) shall be omitted.  

                   [F.No. 5/13/2004-BIS-(Vol-V)]
                   JAY SINGH, Jt. Secy.

*WORST WINTER
China's coal needs, which surged in recent months as the country battled one of its worst winter in decades, has eased sooner than expected, producers and traders said, adding that many utilities on the southern coast had probably purchased enough supplies to last thro ugh March. Scant evidence of Chinese buying for the second quarter also added to concerns that thermal coal prices, up as much as 20 per cent this year, could slide further.

RETREATING BUYERS
Thermal coal prices on the global COAL Newcastle weekly index fell $12.39 from a week ago to $89.61 a tonne, free-onboard (f.o.b) Australia's Newcastle port. "The Chinese buyers came into the market in full force in December and January but they are now retreating very quickly," said a Singapore-based trader.  "There's a lot of uncertainty about Chinese demand going forward and that's weighing on, the market. Supplies from Indonesia is also expected to increase over the coming weeks as the weather improves, so that's another bearish factor," the trader said. Producers and traders did not expect Chinese demand to wane until after the Chinese New Year, but warmer weather, the reopening of the key Qinhuangdao coal port last week and increased coal supplies in the domestic market, means there is no longer an urgent need for supplies.

LUKEWARM INTEREST
Most producers said Chinese buyers were showing lukewarm interest for the second quarter, rather waiting for lower spot prices or more favourable freight rates. Still, an Australian producer said he was in talks with a major Chinese buyer to sell 500,000 tonnes of coal for delivery in the second quarter. The buyer was looking to purchase the shipments at about $85-90 a tonne (f.o.b,), based on coal with a calorific value of 6,080 kcal/kg (NAR). Prices vary depending on ash and sulphur content.