The contract price agreed to between the parties, which serves as an industry benchmark for supplies of seaborne thermal coal in Asia, saw over a threefold jump from the settled price of $109.97/mt FOB in June 2021.
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COAL | ELECTRIC POWER | METALS | SHIPPING 11 Oct 2022 | 08:02 UTC
Glencore, Tohoku settle Japanese coal contract price at record $395/mt FOB
HIGHLIGHTS Price concluded at $109.97/mt FOB in 2021
Price seen impacted by tight supply of high-CV coal
Volume transacted between the companies unclear
Author Suyash Pande Pritish Raj Editor Aastha Agnihotri Commodity Coal, Electric Power, Metals, Shipping
Global coal miner Glencore and Japanese power utility Tohoku Electric have entered into a long-term contract for supplies of thermal coal from Australia at a record high price of $395/mt FOB, basis 6,322 kcal/kg GAR for delivery between October 2022-September 2023, market sources aware of the development told S&P Global Commodity Insights Oct. 11.
While Glencore declined to comment, queries sent to Tohoku did not elicit a response until the time of writing. Volume transacted in the contract, however, was still uncertain.
The contract price agreed to between the parties, which serves as an industry benchmark for supplies of seaborne thermal coal in Asia, saw over a threefold jump from the settled price of $109.97/mt FOB in June 2021.
This happened primarily because the Russia-Ukraine war followed by Europe's sanctions on Moscow created a supply tightness in the global thermal coal market, triggering a surge in prices of several origins, particularly for high-CV coal.
According to sources, the Newcastle 6,000 kcal/kg NAR was heard being priced at around $390/mt FOB on Capesize basis for October-loading.
Australian coal prices have remained elevated post the war as buyers, especially from Europe and Japan, have been trying to secure supply of the high-CV material as an alternative to Russian thermal coal.
An Indonesia-based trader said the price reflects how tight the market for high-CV thermal coal is, with alternatives also priced higher.
An India-based trader said the price for Richards Bay was indicatively at a higher level on a per kcal basis than the settled price for the Glencore-Tohoku contract.
"The number is unusual because the market was correcting last week for Australian coal. The Newcastle 5,500 kcal/kg NAR and the 6,000 kcal/kg NAR coal price were both falling but we have to see how it impacts prices now," another India-based trader, who specializes in Australian coal, said.
Participants said since the supply of high-CV thermal coal has been tight, Japanese end-users are also trying to secure tonnages before the effect of El Nina on the Japanese winter, which typically boosts demand for heating and power.
According to sources, the Richards Bay 5,500 kcal/kg NAR coal was priced at $175/mt FOB, while the Newcastle 5,500 kcal/kg NAR coal price was indicated at $155-$170/mt FOB. |
