JFE: boosting coal buying from U.S., China, Russia

Japan's JFE Steel Corp said on Tuesday it is boosting purchases of coking coal from the United States, China, Russia and Indonesia after heavy floods hit production sites in Australia, its biggest supplier.

A company spokesman made the comment to Reuters.

He declined to say if JFE, the world's fifth-biggest steelmaker, is buying on the spot market or boosting purchases under long-term contracts.

JFE relies on Australia, which has been hit by heavy flooding in the main coking coal state of Queensland, for about 80 percent of its coking coal needs, equivalent to around 17 million tonnes a year.

A spike in the spot price could hurt steelmakers' earnings in early 2011.

The Nikkei business daily said on Tuesday that profits of JFE and Nippon Steel Corp, the world's No.4 steelmaker, could undershoot their forecasts in the year to March 31 due to rises in iron ore and coal prices, making the steel sector .ISTEL.T the worst-performing sector on the Tokyo Stock Exchange on Tuesday.

The Nikkei said Nippon Steel's recurring profit -- which is pretax and before special items -- is expected to be around 220 billion yen ($2.66 billion) this financial year, about 30 billion yen lower than its forecast, while JFE's recurring profit may total around 200 billion yen, missing its forecast by 20 billion yen.

That compares with a mean estimate for Nippon Steel of 256.3 billion yen in a survey of 20 analysts in Thomson Reuters I/B/E/S. A mean estimate for JFE's profit is 224.5 billion yen in a poll of 21 analysts.

Shares in Nippon Steel, the world's No.4 steelmaker, tumbled 1.4 percent to 293 yen, while JFE fell 1.4 percent to 2,787 yen. ($1=82.66 Yen)