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The agreement for the Japanese financial year, ending March 2007, comes after more than three months of negotiations between the coal major and its Japanese buyers.
According to Reuters, the 2007 contract price settlements have been long delayed as Australian producers balked at a 20% slash to prices suggested at the start of the year. Instead, suppliers waited for the thermal price to soar in excess of $50.
The $52.50 Xstrata price is consistent with the current thermal coal price, which has been hovering around $52 to $53. According to the Barlow Jonker Index, on July 6 it was $52.05 after touching a high of US$53.20 in May, Coalportal reported.
Xstrata’s agreement will set the tone for further negotiations between other Australian coal suppliers and their Japanese customers, with other majors BHP Billiton and Rio Tinto expected to follow suit.
