The newsletter said most Japanese steelmakers would like to conclude the talks by the end of March, but the offer would make it difficult for Sherritt and Fording to participate.

The steelmakers hope to negotiate better prices by talking to Canadian and Australian suppliers at the same time, Tex, widely regarded as a mouthpiece for the Japanese steel industry, said.

BHP Billiton and Fording, the world's first and second-largest exporters of coking coal respectively, have taken a disciplined marketing approach that has helped coking coal to its current record premium over semi-soft/PCI coal.

But some market watchers have speculated that if Sherritt gained control of Fording it could prioritise short-term profits to reduce debts and show its shareholders just what a clever buy it had made.

Analysts expect coking coal prices to weaken next year, in line with steam coal prices.