PERTH Jan 18 Major Japanese utilities may be
forced to pay nearly 50 percent more than a year ago for their
largest annual thermal coal contracts as floods in Queensland
push prices higher, according to an analyst report released
The price for the key Japanese fiscal year thermal coal
contract could settle at $145 per tonne, up from $98 per tonne
for the same contract last year, Macquarie Research said in the
A $145 per tonne price would be well over the record seen in
2008, when prices spiked due to flooding in Queensland and the
annual contract settled at $125 per tonne.
"The supply disruptions are severe ... by the end of
February, we think spot pricing will be quite a bit higher and
that's when contracts will be negotiated," Hayden Atkins, an
analyst with Macquarie Research said.
Contracts generally settle around spot price levels, often
with some premium built in for supply security.
The Japanese thermal coal contract, which runs from April 1
through March 31 of the following year, is a benchmark for other
coal deals and is typically negotiated between Xstrata
and large Japanese utilities including Tokyo Electric Power Co
(TEPCO), Tohoku Electric Power Co Inc , and Chubu
Supply issues are not limited to Australia, with other major
coal producers also hit by weather that has disrupted
"There are problems in Colombia, Richards Bay (in South
Africa) is running low on stocks, and it's still rainy season in
Indonesia," Atkins said.
Many coal analysts are still in the process of updating
their forecasts for the Japanese fiscal year contract, with
informal estimates varying widely from $120 per tonne to $140
per tonne. Morgan Stanley updated their Japanese fiscal year
forecast to $130 per tonne in a report released on Tuesday.
Japan is Australia's largest thermal coal buyer as well as
the country with the largest demand for seaborne thermal coal
(Reporting by Rebekah Kebede; Edited by Ed Lane)