Benchmark energy coal prices at Australia’s Newcastle port rose after six straight weeks of decline following contract settlement between Xstrata XTA.L and Japan’s Chubu Electric 9502.T.
Thermal coal prices rose $5.83 from a week earlier to $125.42 a tonne, the globalCOAL’s NEWC weekly index showed in the week ended April 12, based on prices at Australia’s Newcastle port.
After peaking at $150 a tonne spot in February, prices for prompt-delivery coal languished as North Asian utilities reduced purchases ahead of contract negotiations.
A decline in heating demand with the arrival of spring placed further downward pressure on prices.
“The Xstrata settlement has set a new benchmark and helped to boost globalCOAL prices. The spot market was very quiet before but now it is picking up slightly and there are more enquiries,” said a Sydney-based trader.
Xstrata gained a 125 percent price increase, sealing 2008 thermal coal prices at $125 a tonne with Chubu, Japan’s third-largest utility. [ID:nT11521]
Industry sources said the spot market was still weak as other Japanese utilities remained in negotiations with coal miners in Australia, Indonesia and China.
“There are issues such as carry-over tonnages from last year which are still negotiated as well,” said a Singapore-based trader. “So the Japanese utilities are not out in the market in full-swing yet.”
Industry sources said Korean utilities were fairly well stocked with about three weeks worth of coal supplies.
On the supply side, producers and traders said output from key exporting countries Australia, Indonesia and China have also been stable.
Some market participants anticipate prices to fall slightly in the coming weeks due to increased exports from China as well as a seasonal low in demand in the second quarter.
Traders said exports of high-grade coal in China has increased as high international prices prompt miners to ship more coal overseas.
Recovering exports are also supporting Chinese high-grade coal at about $90 a tonne, based on benchmark spot prices for top grade coal at Qinhuangdao, China’s top coal shipping port