Japan: Major Steel Maker Mulls Sourcing Coking Coal from Non Australian Markets

In what could be regarded as a precursor to an imminent trend, the renowned Japanese steel maker--Nippon Steel and Sumitomo Metal--is learnt to be re-working on its Coking Coal procurement strategy as the frequent abrupt price rises due to supply disruptions every now and then in Australia have impacted the margins of the steel maker.

The Japanese steel major is learnt to be working on a plan to broaden its Coking Coal import origins, instead of relying solely on Australia, which is prone to frequent supply disruptions. The steel maker is analyzing the option of sourcing Coking Coal from suppliers in USA, Canada, Russia, Mongolia and Mozambique. There is also a possibility of the company investing in mining in Russia.

As a matter of fact, the Japanese steel producers are dependent to the extent of 71% on Australia for procuring Coking Coal. Frequent supply disruptions in Australia trigger abrupt price hikes for the coal that impact profit margins of the steel makers apart from inflicting volatility in steel prices.

The ideating move could also be a food for thought for the Indian steel companies, which are also dependent on Australia for sourcing the coal.