Regional Coal: Japan coal talks stall

Australian coking coal miners are busy settling 2003 contracts with international customers, while the negotiations between thermal coal buyers and sellers have stalled over price, The Australian newspaper reported Tuesday.

Japan's major utilities such as Tohoku Electric Power Co are understood to have rejected a rollover of the 2002 contract price for thermal coal and are demanding price cuts to bring contracts in line with falling spot prices.

The Japan-Australia reference price for thermal coal, the variety burned to produce electricity, fell 17 per cent to around US$28.50 per ton free on board (fob) in 2002, and has sunk well below this level since.

The current spot price is about $23.80 a ton.

The thermal coal market is facing tough conditions with oversupply in the world and slowing economic activity expected to result in a 4 to 4.5 per cent price cut.

UBS Warburg resources research director Glynn Lawcock said thermal buyers and sellers were locked in a stalemate with neither side prepared to budge.

Semi-soft coking coal, an essentially better quality thermal coal, was also looking like being $2.00 a ton weaker in the 2003 Japanese fiscal year. (*)