PERTH Aug 24 (Reuters) - Australia's thermal coal prices, a benchmark for Asia, were flat at just over $120 per tonne in the week ending Tuesday, as weak demand kept trading thin.
Thermal coal on the globalCOAL Newcastle index for the week to date was $121.19 per tonne on Tuesday, steady against $121.02 per tonne a week earlier.
Traders said activity was minimal, with top buyer Japan still on the sidelines after the March tsunami that crippled coal plants and infrastructure, cutting demand.
Top thermal coal exporter Xstrata is beginning negotiations with Japanese utilities for their annual contract beginning Oct. 1, sources said.
In their last negotiation, which began before the quake in Japan, and was settled soon thereafter, Japanese utilities agreed to a price just below $130 a tonne for the annual contract beginning April 1, the primary supply contract for the year.
Since then, prices have drifted lower and trade sources said they expected the negotiations to give direction to the Asia-Pacific market.
"It will help provide more pricing points for the Newcastle market," one trade source said.
But sources also said that with coal demand sluggish in Japan, utilities there are not likely to settle soon, preferring to wait for a price drop.
"The sentiment is that they are not going to conclude anytime soon," one Sydney-based source said.
Korea South East Power Co Ltd (KOSEP) bought 900,000 tonnes of coal of Indonesian origin with minimum specifications of 4,600 kcal/kg for September and December delivery for $105-$110 free-on-board (FOB) basis via tender. KOSEP bought 185,000 more tonnes than it was seeking through its tender.
But the company passed up on offers for another tender to buy high-calorific coal due to high prices, company source said on Tuesday.
Korea Western Power Co Ltd (WP) also put out a tender for a total 495,000 tonnes of sub-bituminous or bituminous coal for shipment between September and December.
Chinese buyers, whose buying patterns are heavily dependent on Chinese domestic prices, have remained largely on the sidelines over the past month after signing a raft of deals in the second quarter which helped push July import numbers to a record high.
In the week ending Aug. 24, thermal coal prices in the world's largest coal consumer and producer dropped for an eighth week to 826 yuan ($129.123), but some said a rebound might be in sight.
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McCloskeys weekly physical spot/freight prices...<0#MCC-CASH>
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API2 coal paper prices, McCloskeys............<0#MCC-C-API2>
Indonesian Govt Coal Benchmark................<0#COAL-ID> ($1 = 6.397 Chinese Yuan) (Editing by Ramthan Hussain)
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