Japanese producers claim that Australia must meet supply commitments

Japanese producers claim that Australia must meet supply commitments

According to claims made by Japan's Nippon Steel Chairman Takashi Imai, Australian iron ore and coal producers are obligated to keep Japan well supplied with raw materials. Mr. Imai also stated that he does not believe that Japanese mills should have to compete with Chinese producers for raw materials. He also said that the raw materials market is as tight as he has ever seen and China's huge increase in demand for steel has boosted production and demand for iron ore and coal to record levels. However, Imai believes the situation is temporary and does not feel that the country will face a raw materials crisis. According to market reports the situation is expected to cause suppliers to push for price hikes of up to 20% when coal and iron ore contract prices are up for renegotiation next month. The contract prices will determine Japanese steel prices and production volumes for the 2004-2005 year. Furthermore, Japanese producers such as Nippon Steel are financially supporting Australian coal and iron ore producers by investing in their expansion plans through either direct investment or by long-term contracts.