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JFE Steel boosting purchases from sources other than BHP Billiton

The company says it is looking to buy coking coal from sources other than BHP Billiton, as prolonged industrial action and heavy rain constrain shipments from BHP's Queensland coal mines.

TOKYO (Reuters)  - 

JFE Steel Corp, the world's fifth-biggest steelmaker, said it was boosting purchases of coking coal from sources besides BHP, as prolonged industrial disputes and heavy rain constrain shipments from its Queensland coal mines.

BHP this month declared force majeure on deliveries from the mines owned in partnership with Japanese trading house Mitsubishi Corp.

"Our projection in early April, when it declared force majeure, was that the mine will still be able to secure output of about 60 percent of its capacity," said Eiji Hayashida, president of JFE Steel and chairman of industry body the Iron and Steel Federation of Japan.

"But now that it looks more difficult to see that level in April and May, we are looking to buy coal from other sources," he said, adding that the company had almost secured necessary volumes.

Production from BHP Mitsubishi Alliance's Queensland collieries supplying steel-making coal has been constrained by a campaign of rolling work stoppages and other industrial action by roughly a third of its workforce, coupled with the impact of heavy rain on mining and shipping.

Hayashida also said on Thursday the industry's crude steel output in the year to March 2013 was expected to fall slightly short of the previous year's 106.46 million tonnes.

"The market outlook remains pretty dim, particularly in the second-half, given China's record crude steel output in March," he said.

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