The recently negotiated price, double the current benchmark price, is expected to put pressure on Japanese steel mills to accept a big price hike for next year. Discussions are currently under way between Australia's coking coal exporters and the Japanese to settle contract coking coal prices for the year beginning April 1, 2005.

Brazilian steel producers struck the deal with BHP Billiton Mitsubishi Alliance (BMA), a joint venture in Queensland that accounts for a large portion of global coking coal supplies.

Meanwhile, Platts reported earlier in the week a major departure from past practice whereby BMA is offering unified price contracts, without distinction between hard and semi-soft coking coals. The package deal is if the mill wants to buy premium coal, it also has to buy some portion of second class coal as part of the package deal at one price.

It is believed BMA representatives from Singapore were in Tokyo for a second round of talks on December 2 and 3 and tabled the unified hard coking coal price then.

Iron ore prices are also expected to be increased by between 20% and 30% for 2005-06 shipments.

Negotiations are also under way between Australian iron ore exporters and the Japanese steel mills for next year's contract iron ore prices.