* Steelmakers to carefully observe U.S. probe over imports
* Coking coal prices to fall as rail lines resume operations
* Falling steel prices in China seen as temporary phenomena (Adds comments)
By Yuka Obayashi
TOKYO, April 24 (Reuters) - Japanese steelmakers are concerned at “protectionism” by U.S. President Donald Trump, Japan Iron and Steel Federation chairman Kosei Shindo said on Monday, following Trump’s first shot across China’s bows over steel exports.
Japan is the world’s second-largest steel producer, although Shindo said it was too early to assume a U.S. probe into exporters of cheap steel would draw in Japanese steel makers.
“We are greatly concerned over Trump’s protectionism, although we hear he has softened his tone on some issues with a grasp of reality,” Shindo, who is also president of Nippon Steel & Sumitomo Metal Corp, told a news conference.
“We will need to closely watch his actual policies and negotiations,” he added.
Trump on Thursday launched a trade probe against China and other exporters of cheap steel into the U.S. market, raising the possibility of new tariffs.
Diverging from the Obama administration’s approach to the issue, which relied largely on filing complaints to the World Trade Organisation, Trump ordered a probe under Section 232 of the Trade Expansion Act of 1962, which lets the president impose restrictions on imports for reasons of national security.
Shindo also said he expects coking coal prices to gradually fall as rail lines resume operations in cyclone-hit Australia, Japan’s biggest supplier, although it could take a while for the supply chain to return to normal.
The price of coking coal - a key steel-making ingredient - has jumped since Cyclone Debbie last month cut rail lines in the world’s biggest coking coal export region.
Japanese steelmakers have bought coking coal from the United States, Canada and China to replace lost supply from Australia, but are paying nearly double the $150 a tonne price being discussed with sellers for second-quarter supply before the supply disruption.
Shindo also said recent weakness in China’s steel market will be short-lived as domestic demand is “pretty solid”, even as the market digests higher inventories of steel panels.
Reporting by Yuka Obayashi; Editing by Richard Pullin