Wednesday, 22 Jun 2011
Reuters quoted five trading sources familiar with the situation said Chinese miners and Japanese utilities have largely agreed on a long term thermal coal price for the financial year that started in April, but the volumes Japan buys will be limited with little impact expected on the spot market.
One source said the price for thermal coal with a calorific value of 5,800 kilocalories per kilogram is expected to be around USD 145 a tonne free on board up from last year USD 115.50 a tonne but added that it had yet to be finalized.
The price is around USD 25 a tonne higher than Asia benchmark price, but sources said they see little impact on the spot market in Asia. The term price is expected to include China 10% export tax on coal.
Sources said officials from Japan Coal Development which negotiates on behalf of the utilities and other general industries reached the agreement in China last week. Weeks earlier China had offered around USD 150 a tonne but Japan resisted.
One source said "I don't think there will be any impact on the market. The volumes will be limited. Australian coal even on a CIF basis is still cheaper."
Another source said "There is no impact on the spot market at all. The price reflects China's domestic market situation and the export tax."
Volumes have yet to be worked out, sources said, but one said they are expected to stay at a level similar to last year. (sourced from Reuters)
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