Coal news and updates

Glencore Xstrata-Tohoku agree Oct-Sept term Coal price at $85.80/ton: Source

Tohoku Electric Power Co. (9506.TO) has agreed to buy Australian thermal coal from Glencore Xstrata PLC  for delivery in the year from October 2013 through September 2014 at $85.80 a metric ton, a big drop from their year-earlier contract price of $96.90 a ton, a person with direct knowledge of the talks said Wednesday.

The 11% price drop has wide significance for the coal market the two companies' term-pricing deals serve as a benchmark for other Japanese utilities, as well as for some Taiwanese and South Korean buyers.

The price is 4.6% down on their July 2013-June 2014 contract of $89.95 a ton, which reflects continuing oversupply in the Asia-Pacific thermal coal market and a sign Australian resources revenues may keep falling.

The Australian government said in a report issued Wednesday that an abundance of seaborne supply has pushed prices down despite growing import demand.

"The recent completion of key transport infrastructure in China has lowered the cost of delivering domestic coal to southern regions, putting additional pressure on landed coal prices," the report said.

Source: The Wall Street Journal