Tokyo Electric Power (Tepco) will buy Australian thermal coal from Glencore plc this year at prices based on the spot index, industry sources told Reuters.
Under an annual supply contract agreed by the two companies, Tepco will pay a premium of about $2-$3 a tonne to the globalCOAL price at Australia’s Newcastle port, the sources said. The contract period began on July 1.
Given the benchmark price is now at about $70, the near-term price would be about $72-$73, roughly 20% lower from last year's fixed price of $89.95.
The price level will likely be followed by other Japanese utilities as Tepco is regarded as the lead negotiator, according to Reuters. Glencore is the largest thermal coal exporter from Australia.