TOKYO Electric Power and Swiss-based Xstrata PLC have agreed on...

TOKYO Electric Power and Swiss-based Xstrata PLC have agreed on a price of about $US85 a tonne for Australian thermal coal under long-term contract delivery starting in January, a person close to the deal said today.

The price is much higher than the benchmark $US70-72/tonne for Australian thermal coal delivery from April 2009, although Japan's demand for thermal coal has been weak since autumn 2008 due to falling electricity demand.

"As China increases coal imports, Japanese utilities have gradually become worried about stable supply" in the Asia Pacific market, and "that's why Tokyo Electric accepted the price", the person said.

Tokyo Electric, Japan's largest power utility by capacity, refused to comment.

Given the agreed price, continued high domestic demand for coal and prices in China, sellers of Australian thermal coal are now looking at $US90/tonne for thermal coal delivery to Japanese utilities starting April 2010, according to coal traders.

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Japanese utilities use about 50 million tonnes of thermal coal a year, and a large part of it is bought under term contracts delivery starting in April.

Australia is Japan's largest coal supplier, accounting for roughly 60 per cent of its demand.



http://www.theaustralian.com.au/business/mining-energy/tokyo-electric-breaks-benchmark-for-australian-thermal-coal/story-e6frg9e6-1225814422296