Mannila (Platts)-- Major Australian coal producer Xstrata has kicked off 2011 fiscal year thermal coal contract negotiations with power utilities in the west of Japan, excluding Tohoku Electric whose major plants in the east are unoperational following the devastating March 11 earthquake and tsunami, sources said Monday.
In talks held last week, Xstrata was said to have held separate meetings with representatives of Chugoku Electric, Kansai Electric, Chubu Electric and Kyushu Electric, one Japan-based source said.
Meetings have yet to be held with Hokuriku Electric and Shikoku Electric, both of which are situated in the western part of Japan, the source said. Xstrata also held off talks with Tohoku Electric and Tokyo Electric (Tepco).
No prices were tabled by either Xstrata or the Japanese power utilities during the separate talks, sources said, although Xstrata representatives may return in the next week or 10 days to resume negotiations.
"There were no prices talked about during the meetings last week. Both sides stated their market analysis. I believe there were no numbers discussed, because both sides felt there would be a big discrepancy in the price expectations," the Japanese source said.
In the absence of Tohoku as a so-called champion negotiator for the Japanese power utilities, it is believed that Chugoku will lead the FY2011 talks for the Japanese side, the source said.
'TOKYO STILL HAVING ROLLING BLACKOUTS'
Industry sources said coal prices had not skyrocketed as previously expected following the massive Japanese temblor, as the loss of coal-fired power capacity in Japan had been huge.
"Clearly, there is a shortage. This is a power crisis. That is why Tokyo is still experiencing rolling power outages," the Japanese source said.
"Tohoku is one of the biggest coal buyers in Japan. Its Haramachi coal-fired power station alone consumes up to 5 million mt of coal annually.
The market for Australian coal in Japan has shrunk. Japan is currently not a major destination for Australian coal," the Japanese source said. A coal trader estimated Japan's fiscal 2011 coal imports would decline by 12-17 million mt.
"There has been no advice when the damaged Japanese coal-fired power stations will resume operations. From my point of view, it will take about a year or longer before these damaged power plants return to operation," the Japanese source said.
"Australian shippers have to find other markets for their coal. I don't see coal prices riding high this year because of the tragedy that struck Japan." He added, however, that certain power companies would run their coal-fired power stations at higher capacities this spring -- a season when coal stations are usually idled or stopped for maintenance -- to provide support in the current electricity crisis.
"But the JPUs will not only be increasing their coal-fired power capacities. The JPUs will also operate their other power stations running on oil and LNG at higher capacities," he commented.(sourced:The Platts)
Tags :Kyushu Electric, Hokuriku Electric, Shikoku Electric, Tokyo, raw material,
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