Bloomberg reported that Sumitomo Metal Industries Ltd and Kobe Steel Ltd, Japan third and fourth largest steelmakers, obtained a 10% reduction in the price of coking coal, a key raw material.

Sumitomo Metal agreed to pay Anglo American Plc and BHP Billiton Ltd about USD 285 a tonne for the three months starting October 1.

Mr Ryuichi Nakagami a spokesman for the Kobe based company said Kobe Steel settled a deal with suppliers at about USD 285 per tonne.

Coking coal prices are declining from the April to June quarter when steelmakers paid a record USD 330 a ton after supply from Australia was disrupted by heavy rain and flooding. Mining companies last year scrapped a decades old system of annual contracts and switched to quarterly accords.

The steelmaker said Sumitomo Metal also agreed with BHP to buy half of its coking coal on a monthly basis and the rest through quarterly contracts.

The Nikkei newspaper reported earlier without saying where it obtained the information that Japanese steelmakers settled coking coal deals with Anglo American.

(Sourced from Bloomberg)