BHP Billiton Ltd. (BHP.AU) said Wednesday that the recent trend of China becoming an importer of coking coal looks sustainable and that the Asian giant is expected to import about 30 million metric tons of the key steelmaking input in 2009.

BHP Marketing President Tom Schutte said he believed the Chinese buying would continue, with 70% of China's steel capacity based in coastal provinces that could easily access foreign coal.

Chinese mills are also building larger blast furnaces that require better quality coke and therefore will need more imports of high quality hard coking coal, he said.

"A small percentage of high quality coking coal imports into China looks sustainable given the push towards coastal, larger mills which require higher quality coking coals," he told analysts.

As traditional buyers of seaborne coking coal scaled back imports this year, China stepped in to fill the demand gap, with cheaper freight rates helping to make foreign coal attractive to Chinese mills.

Some have argued that rising freight rates could crimp Chinese buying, but Schutte said he didn't believe this would be the case.

"We are quite comfortable that there is quite a lot of (freight) supply coming into the market over the next two years," he said.

China's move to import coking coal has been driven in part by the closure of some of its domestic mines.

In its presentation to analysts Wednesday, BHP said spot coking coal prices are now above contract prices and this is providing an incentive for the restart of idled mines.

Still, the company said there will be a lag in bringing on this idled capacity, and this will restrict supply and support prices around current levels.

BHP, together with joint venture partner Mitsubishi Corp. (8058.TO), is the world's biggest producer of coking coal for the seaborne market.

BHP Moves Some Met Coal Buyers To Quarterly Pricing

Schutte restated BHP's strong preference for floating or indexed pricing mechanisms for commodities rather than annual resets of pricing as has been the norm for products like iron ore and coking coal.

BHP has recently made some progress in moving traditional coking coal customers to more regular repricing, Schutte said, with some agreeing to move to quarterly pricing referenced to spot prices.

"We have in certain instances managed to renegotiate some of the prices to a shorter term but the progress in that space is quite new," he said.

BHP would happily move all of its iron ore to indexed pricing over time, Schutte said, but the miner will continue to hold annual pricing talks for product that is contracted to be sold under the benchmark system.

Iron ore miners are still locked in a stand off with China over benchmark prices for the year started April 1, and Schutte said talks on next year's benchmark have not yet begun.

BHP has been watching developments in the case of the detention of four Rio Tinto Ltd. (RTP) iron ore marketing employees by Chinese authorities, he said, but the miner has not made any changes to how it operates in China as a result.

BHP Chief Commercial Officer Alberto Calderon told analysts that China's economic recovery has been better than expected and leading indicators are positive, although there remain some risks associated with loan growth and overstocking.

"China's economic recovery is gaining momentum," he told analysts.

In the OECD economies, Calderon said the worst of the downturn was over but it is not clear what the pace of recovery will be.

BHP told analysts it expects the world to be short on copper in the medium to long term and that, while scrap will gain market share, import demand for copper concentrate and cathode is set to grow.

Similarly, BHP said it believes the world will be short on energy in the medium to long term, with demand being driven by emerging market growth.

-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094; alex.wilson@dowjones.com