Record 2011 coal price agreed by Xstrata, Chugoku Electric
Xstrata and Chugoku Electric have settled on an annual coal contract beginning April 1 at around $130 per tonne, 30% higher than the previous year's contract
PERTH (Reuters) -
Xstrata and Chugoku Electric have settled an annual coal contract for the Japanese fiscal year starting April 1 at a record level of around $130 per tonne, over 30 percent higher than last year's contract, sources told Reuters on Friday.
The settlement price exceeds the 2008 record of $125 per tonne, and is in line with expectations for a higher settlement price due to weather-related production difficulties in Australia.
The settlement price is nearly $10 above the current globalCOAL index for Australia's Newcastle coal, the benchmark for Asian prices, which closed at $120.84 for the week to date on Thursday.
Japan's annual contracts are generally around spot price levels, often with a supply security premium.
The negotiations between Xstrata, the world's largest exporter of power-station coal, and Japanese utilities were delayed after a deadly quake hit Japan last month and talks resumed last week.
Japanese utilities including Tokyo Electric Power Co (TEPCO), Tohoku Electric Power Co Inc , both of whom declared force majeure on some coal deliveries after the quake due to power plant outages and damaged ports.
Tohoku, which was expected to be the lead negotiator for Japanese utilities this year, was replaced by Chugoku Electric Power in the negotiations.
Trade sources said Friday bids and offers were initially far apart, with Xstrata offering around $140 per tonne and Japanese utilities countering with bids as low as $120 per tonne. (Reporting by Rebekah Kebede; Editing by Balazs Koranyi)
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