Glencore and Japanese power utilities have settled quarterly thermal coal contract prices at $94.75 a metric ton, up from around $64 last quarter, sources confirmed on Tuesday, reflecting a surge in spot prices.
The Japanese buyers agreed to pay the higher price to secure supplies of high quality thermal coal from Australia, the Financial Times reported overnight. Glencore reached the settlement with Japan’s Tohoku Electric following two months of negotiations, an industry source with knowledge of the matter said.
“We were told it came in at $94.75, which was not unexpected given the surge in spot,” added a coal trader in Sydney.
Australian Newcastle spot cargo prices for November have almost doubled since June to $100.25 per metric ton, the highest since 2012.
The price rally for thermal coal, used to generate electricity, was triggered by a Chinese government decision to cap its mining output to address labor issues and pollution, forcing its utilities to import more coal.
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