Regional coal: Japan OKs record coal price

Australia's major thermal coal producers are achieving record price settlements with Japanese power companies in supply contract negotiations for 2007-08, The Daily Telegraph reported on Friday.

Both Xstrata and Rio Tinto, the country's largest thermal coal exporters, have settled most supply negotiations with the 10 Japanese power utilities for the contract year starting April 1 at or above $US55 a tonne, free-on-board, or about 5 percent higher than previous contract.

Declining exports out of energy-hungry China, which is increasingly consuming its own coal, spooked the Asian utilities and allowed Xstrata and Rio Tinto to stay firm on their price demands.

"It is a very good outcome for the producers and does reflect that trend in China in terms of its declining exports," said Clyde Henderson, a Sydney-based coal forecaster with Hill & Associates.

In the last three years, China's coal export volumes have dropped by 47.3 million tonnes.

Prices are also being buoyed by rising production costs in Indonesia, where miners are having to remove more and more waste rock and the government has removed diesel fuel subsidies.

Russia is also ramping up its thermal coal production, but that production is relatively high-cost.(*)