Minershave won record prices for the annual thermal coal contracts withutilities, amid strong demand in Asia and supply disruptions inAustralia earlier this year.
Xstrata and Chugoku Electric of Japan closed a deal on Fridayfor the fiscal year starting April 1 with the London-listed minersupplying thermal coal, used to fire power stations, at $130 a tonne, up32.6 per cent from $98 a tonne of 2010-11.
Thedeal, which creates a benchmark for energy-hungry Asia, is above theprevious peak set in 2008-09 at $125 a tonne. Melinda Moore, commoditiesanalyst at Credit Suisse, said the settlement was somewhat above marketexpectations.
“The result reflects tight conditions for premiumcalorific value coals consumed by Asian power plants, largely caused bypoor Australian weather conditions over the past six months and strongeroverall demand, particularly from China and India.”
Thermal coalprices have been quietly moving higher since the 2009-10 annualcontracts were set at $71 a tonne. But the recent flooding inAustralia’s coal-rich state of Queensland has cut supplies from one ofthe world’s top thermal coal exporters.
The Queensland ResourcesCouncil, which represents big miners, said on Friday that the state hadlost about 30m tonnes of coal production, or 15 per cent of annualoutput, due to flooding. The estimate is significantly higher thanprevious official forecasts.
Output has also been lower at othertop producers – Indonesia, South Africa and Colombia – because of heavyrains. At the same time, a severe shortage of railway wagons has beenhurting Russian coal output, pushing up European coal prices.
The hefty price increase comes in spite of damage to several coal-fired thermal power plants in Japan following the earthquake and tsunami that struck the country three weeks ago.
The damage forced utilities including Tokyo Electric Power and Tohoku Electric Power to ask miners to defer shipment, denting demand over the short term.
Butanalysts and traders said the closure of several nuclear power plantswould boost thermal coal consumption over the medium term in thecountry.