Tokyo Electric Power Co has agreed to pay about $85 a tonne for Australian thermal coal in 2010 from miner Xstrata.
Tokyo Electric Power Co has agreed to pay about $85 a tonne for Australian thermal coal in 2010 from miner Xstrata, a source familiar with the price terms said on Thursday, in a sign suppliers have regained the upper hand in price talks. Xstrata, along with Peabody, had been seeking a headline price of around $85 a tonne, effective January 2010, while buyers had aimed for a price closer to about $75.
The outcome is in contrast to early 2009, when another Japanese utility, Chubu Electric Power Co, secured a price cut of up to 44 percent to $70-$72 a tonne for the fiscal year ending March 2010, free on board. Many Japanese utilities negotiate prices based on fiscal rather than calendar years.
The source, speaking on condition of anonymity because the contract was a confidential agreement, said he was familiar only with the agreed price and not the other terms of the deal.
An Xstrata spokesman in Australia declined to comment. A strengthening Australian dollar, along with expectations of robust Chinese demand, have helped Australian coal prices to rally in the December quarter, though buying interest from China faded slightly toward the end of the quarter.