Japan's Tokyo Electric
Power Company has settled its July 2013-June 2014 thermal coal contract with
Australian suppliers at $89.95/mt FOB Newcastle basis 6,322 kcal/kg GAR, a
market source familiar with the matter said Wednesday.
The fixed-price deal at
$89.95/mt FOB Newcastle for thermal coal with a calorific value of 6,322
kcal/kg GAR, can be compared with $95/mt FOB that Tepco agreed to pay for the
April 2013-March 2014 contract for Australian thermal coal earlier this year.
Some market participants
had expected the contract to be settled on a floating price basis as the
Japanese utility switched to a floating price -- an unknown premium to the
globalCOAL Newcastle -- for deliveries in January 2013.
Market participants said
the July 2013-June 2014 contract price appeared favorable to Australian thermal
coal producers who are currently struggling with spot prices falling to the $70s/mt
FOB for Australian 6,300 kcal/kg GAR thermal coal.
"The producers appear
to have done well," said one trader in reaction to Tepco's latest
contract.
Cargoes of Australian
thermal coal with a calorific value of 6,000 kcal/kg NAR, (equivalent to 6,300
kcal/kg GAR) were bid Wednesday in Asian trade at $79.50/mt FOB for loading
from Newcastle port in July, while buying interest in September- and
October-loading cargoes hovered around $76.50/mt and $76/mt, respectively, he
said.
The trader said the Newcastle
thermal coal market was beset by chronic oversupply and cited a recent tender
from Japanese Joban Joint Power Company seeking coal that was oversubscribed by
20 times. The company received offers for 10 million mt of thermal coal to fill
a gap of 600,000 mt in its supply schedule. "There is a glut of coal in
the market," he added.
Another trader too
described the price settled on by Tepco as good for Australian suppliers as
forward derivative prices for Newcastle thermal coal were currently trading at
$81.50/mt FOB for the year starting July 1.
Prices at the Newcastle
trading hub for thermal coal plunged earlier this week when a 25,000 mt parcel
of August-loading Newcastle thermal coal with a calorific value of 6,000
kcal/kg NAR traded at $77.50/mt FOB on Tuesday, and a September-loading parcel
of the same size traded at $79.50/mt on Monday on the globalCOAL platform.
