Japan: Major cement makers are dispersing their coal purchases to hedge against the risk of buying when prices are high. Traditionally, cement companies purchase a year's worth of coal in the month of April because price changes have tended to be small. With coal prices becoming more volatile, however, they are keeping a close eye on the market to gauge favourable times to buy.

Producers are hoping to keep costs in check in this way because coal purchases account for at least half of their materials expenses. Taiheiyo Cement has procured only about 30% of its coal supply for the current fiscal year, while Sumitomo Osaka Cement Co. and Mitsubishi Materials Corp. have each purchased around 60%. Sumitomo Osaka Cement, which began spreading out its purchases in the previous fiscal year, is reportedly considering whether or not to disperse costs even further.

Coal prices began rising in 2010 after major floods in Australia and the jump between January and March 2011, which served as the basis for purchase prices in April 2011, was particularly steep. Consequently, Taiheiyo Cement and Sumitomo Osaka Cement are believed to have paid nearly USD 150/t, an increase of 30% on April 2010. Wholesale coal prices are currently at around USD 135/t.