Hellenic Shipping News BHP Agrees to 7% Coking Coal Price Reduction With Japan's Mills, UBS Says

Japanese steelmakers, the world’s second-largest producer of the metal, won a 7 percent cut in quarterly coking coal prices, the first reduction this year, from BHP Billiton Ltd., according to UBS AG. Prices for the material used to make steel will fall to $209 a metric ton for the three months starting Oct. 1, from $225 a ton in the current quarter, UBS said in a note. A venture between BHP Billiton and Mitsubishi Corp. is the world’s biggest supplier of coking coal.

Prices for coal and iron ore are falling as China’s moves to curb property speculation and restrain credit growth sapped building and autos demand. BHP and Vale SA, the world’s largest suppliers of the two steelmaking materials, this year broke with the custom of setting prices annually by signing quarterly contracts, betting on rising prices.

“Lower prices, but still good outcomes for the producers, during a seasonally weak trading period,” UBS analysts including Tom Price said in the report dated Aug. 31.
JFE Holdings Inc.’s steel unit and other mills agreed to a 12.5 percent price increase for coking coal for the July-to- September quarter. That followed a 55 percent price gain in the April quarter.

Contract prices of iron ore sold by BHP and Rio Tinto Group will probably decline 11 percent in the quarter starting Oct. 1, researcher UC361.com said, citing the average Platts index price.

Hayato Uchida, a spokesman for Tokyo-based Nippon Steel Corp., Japan’s largest steelmaker, declined to comment. Amanda Buckley, a spokeswoman with Melbourne-based BHP, also declined to comment.

Bloomberg Russian Coal Mine Outage Unlikely to Hit Global Market, UBS Says

May 12 (Bloomberg) -- Damage to OAO Raspadskaya’s biggest mine, which supplies coal to steelmakers, is unlikely to “significantly” affect the global market because of Russia’s share of seaborne trade, UBS AG said in a report.

The mine has a capacity in excess of 8 million metric tons a year, representing more than half of the company’s capacity and about 10 percent of Russian output, the bank said.

“Russia’s share of the global seaborne market amounts to only 6 percent, hence we believe the accident is unlikely to significantly affect global balances,” UBS said. “The impact could be relatively more significant for Ukraine which gets more than 50 percent of its imports from Russia.”

The death toll from explosions at the mine in Siberia over the weekend reached 60, the Emergency Ministry said on its website today.

Bloomberg Oil to Average $65 in Second Half on Economic Outlook, UBS Says

Crude oil is expected to average $65 a barrel during the second half of this year as the outlook for the global economy improves and on increased appetite for risk among investors, UBS AG said in a report.

UBS raised its forecast for West Texas Intermediate, the U.S. benchmark crude variety, from $55 a barrel, analysts from the bank wrote in a report dated yesterday. Oil for August delivery traded at $60.36 at 1:50 p.m. Sydney time on the New York Mercantile Exchange.

“Greater risk appetite and some greater optimism concerning the future are likely to see prices tend towards the top half of a trading range of around $55 to $75 a barrel in the second half of 2009,” UBS analysts led by Melbourne-based Gordon Ramsay wrote.

Oil reached a record $147.27 a barrel on July 11, 2008 before dropping to $32.40 on Dec. 19 as the global recession curbed energy use. Prices are up 35 percent this year and reached an eight-month high of $73.38 on June 30.

UBS also raised its 2010 forecast to $70 a barrel from $58, the analysts said. Oil prices will be supported by a weaker U.S. dollar, UBS said. A fall in the dollar spurs demand for commodities as a hedge against inflation.

---Editor: Amit Prakash, John Viljoen.