8 Mar 2011 , 9:00 PM,
Australia's thermal coal prices, a benchmark for Asia, were steady last week in a quiet market as most players waited on the sidelines for the settlement of the Japanese annual thermal coal contract.
Thermal coal on the globalCOAL Newcastle index for the week to date was $US130.75 per tonne on Monday, relatively unchanged from $132 a week earlier and up slightly from $129.48 on Friday.
"It's hard to tell if there's any movement in the current period, it's a little bit quiet, the price is quite stable," one Sydney-based trader said.
Large Japanese utilities Tokyo Electric Power Co (TEPCO), Tohoku Electric Power Co Inc and Chubu Electric , negotiate April-to-March fiscal year thermal contracts with Xstrata, the world's largest exporter of thermal coal.
The contracts are generally around spot price levels, often with a supply security premium.
"Overall, the market is still tight in the Pacific, so miners have a strong negotiation position," one Singapore-based trader said.
Trade sources said that bids and offers stood about $US10 apart, with Xstrata said to be offering a price of $US140 per tonne and Japanese utilities countering with a $US130 per tonne bid.
Although still far apart, the parties were closer than a few weeks ago when the offer was said to be at $US145 per tonne, with utilities saying they would only be willing to pay $US125 per tonne.
Chinese demand for imported coal continued to be thin, with supplies in the world's number one producer and consumer of coal outstripping demand.
Chinese coal with a heating value of 5,500 kcal/kg was flat at 770 to 780 yuan.
As coal prices in Australia have risen, the arbitrage between Chinese coal prices and Australian imports are at the widest since September 2008.
Indian buyers were back in the market for Indonesian coal, traders said, with deals for 4,900 kcal/kg done for around $US80 per tonne.
Week ahead
Xstrata will head to Japan next week to meet Japanese utilities and all eyes will be on the annual contract talks, which are often used as a benchmark for other deals.
The market will also continue to watch for increasing demand from China and India. (Reuters)
Tags : globalCOAL NEWC Index, benchmark for Asia, Newcastle index, spot prices
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