Weak Auto Sales in Japan; Banks Gain

123jump.com Staff
24 Mar, 2009
New York City

Steelmakers in Tokyo gained after BHP Billiton agreed for 57% price cut for coking coal supply. Iron ore prices are also expected to fall as much as 50%. Banks and financials surge after the U.S. proposed a plan to purchase toxic assets. Auto Sales in Japan are expected to dip to 32-year low.

[R]5:00AM New York, 7:00PM Tokyo - BHP Billiton cuts coking coal prices by 57% for Japanese steelmakers.[/R]

Japan market averages rose cheered by optimism the US$1 trillion public-private sector deal to mend the balance sheets of banks will help the global economy to rebound.

Investors were also spurred by news that BHP has cut coking coal prices for Japanese steelmakers.

In Tokyo trading Nikkei 225 index increased 3.3% or 272.77 to 8,488.30, and the broader Topix Index soared 2.7% or 21.16 to 812.72.

In the first section of the Tokyo Stock Exchange 13.3 billion shares worth 826 billion yen were traded and in the second section 171 million shares valued at 2.1 billion yen changed hands.

Of the Nikkei 225 index stocks, 207 rose, 16 declined, and 2 were unchanged. Ebara Corp. led gainers in the Nikkei 225 index shares with a rise of 13% followed by CSK Holdings Corp. gaining 11.8%.

BHP Billiton Cuts Coking Prices to Steelmakers

Nikkei News reported today that BHP has agreed to set the prices for coking coal for Japanese steelmakers at $128 a ton for the fiscal year starting April, reflecting a 57% reduction from a year ago.

The price cut is the first in two years and is forecasted to reduce costs for the domestic steel industry for coking coal by about 1.2 trillion yen per year.

According to the report, contracts with the company were signed by Nippon Steel Corp. and are for heavy coking coal mined in Australia. The Nikkei News says other mining concerns will take a cue from the price reductions.

Separately, Dow Jones reported today that Rio Tinto iron ore chief executive officer Sam Walsh says iron ore contract prices will fall this year on falling steel demand.

However, Walsh says prices are unlikely to fall by the 50% forecasted by the market.

U.S. Treasury Unveils $1 trillion Plan for Toxic Assets

U.S. Treasury yesterday unveiled the Public-Private Investment Program that is oriented to repair bank’s balance sheets and ensure the availability of credit to households and businesses by socking up toxic assets.

Through the $75 to $100 billion in TARP capital and capital from private investors, the program will generate $500 billion in purchasing power to buy illiquid mortgages linked assets.

The plan calls for the government to match the investor funding and lending six dollar for every dollar in the partnership. In theory, for every dollar invested by the investor will be matched by the government and then the government will lend six times the total amount in the investment pool.

Private sector investors are expected to compete with each other to establish the price of loans and securities rather than government may end up purchasing these assets at higher prices.

Gainers & Losers

Ebara Corp led gainers in the Nikkei 225 index shares with a rise of 13% followed by increases in CSK Holdings Corp. of 11.8%, in Clarion Co. Ltd of 9.5%, and Alps Electric Co. of 9.3%.

OKI Electric led decliners in the Nikkei 225 index shares with a fall of 3.1% followed by losses in Nippon Telegraph of 2.9%, in KDDI Corp. of 2%, in Tokyo Gas Co. of 1.4%, and Sumitomo Metal Industries of 1.2%.