PERTH, Sept 28 Australia's thermal coal price index fell in the past week, dragged down in part by top exporter Xstrata's recent settlement with Japanese utilities for an annual supply agreement beginning in October.
Thermal coal on the global COAL Newcastle index for the week to date closed at $122.20 per tonne on Tuesday, down from $123.66 per tonne a week earlier.
Xstrata's settlement price came in lower than the record of $129.85 per tonne for the 2011 benchmark annual contract starting April 1, and less than some in the market had expected.
"Once the Japanese contract was out of the way, a lot of the other markets fell away a little bit too," one Asia-based trade source said.
Slow demand from Japanese utilities continues to affect demand for Australian coal and prices. Coal demand from Japan has dropped sharply since March, when an earthquake and tsunami damaged some coal-fired power plants and infrastructure.
"In any normal year (Japanese utilities) would have had tenders and enquiries. Suppliers are shipping now at a normal pace, but there is just no extra inquiry because they have contracted what they intended to," one Australia-based market source said.
Still, many Australian producers have mostly sold supplies through December, the source said.
The increasing chance of a La Nina weather event forming in late 2011 could boost Australian coal prices. Last year, floods associated with a La Nina event pushed thermal coal prices to record highs.
In China, domestic coal prices rose to 832 yuan ($130.016) on Wednesday, according to the Bohai-Rim Bay thermal coal price index.
With winter approaching and Chinese prices moving slightly higher, Chinese buyers took several cargoes of South African Richards Bay coal, sources said.
In South Korea, Korea Western Power Co Ltd (WP) was seeking a combined 1.475 million tonnes of steaming coal via spot and term tenders. ($1 = 6.399 Chinese Yuan) (Editing by Miral Fahmy)
Trending On Reuters
Prime Minister Narendra Modi met with the Hindu nationalist group Rashtriya Swayamsevak Sangh (RSS) on Friday to discuss his government, in a move that highlighted the organisation's influence but drew criticism from the opposition. Full Article