Reports have South Korean utilities settling 3 million tonnes worth of thermal coal contracts with three Chinese producers at about $US78.50 per tonne last week.

Japanese customers have followed suit by settling 1.3Mt of contracts with Chinese producers for the same price, according to the TEX Report.

A week ago Reuters reported 100Mt of thermal coal was contracted in deals between China’s five leading power companies and producers in Guizhou and Xinjiang provinces, with prices lifting 4% on average.

In another 4% price increase, Yanzhou Coal Mining recently settled 7.84Mt of domestic thermal coal contracts at an average benchmark price of 502.62 yuan a tonne ($US73.54/t).

The latest settlements bear out the prediction that recent Chinese domestic deals would narrow the cheaper price window offered by Australian exporters, as Patersons Securities coal analyst Andrew Harrington told International Longwall News last week.

The globalCOAL NEWC index has lost almost $US6 since, diving 7.74% to end at $70.81/t on Friday.

South Africa’s Richards Bay fared worse than Newcastle, with the globalCOAL RB index losing 8.71% to end the week at $59.14/t.

The globalCOAL DES ARA index, considered to be South African spot thermal coal prices plus freight, sank 8.32% to $65.15/t.

While spot coal has dropped to compete with the recently agreed deals in Asia, crude has continued to gain, with Asia-Pacific benchmark Singapore Tapis closing at $75.79 a barrel on Friday, a gain of 1.6% on the previous week.