Japan's Tokyo Electric Power Company is expected to settle its July 2013-June 2014 term contract to buy thermal coal from Australian miners at a floating price linked to the globalCOAL Newcastle index, a Japanese utility source said Monday.
Last year, Tepco settled its July 2012-June 2013 term contract at a fixed price of $95/mt FOB, basis 6,320 kcal/kg GAR, the source said. But the Japanese utility switched to a floating price -- an unknown premium to the globalCOAL Newcastle -- for deliveries in January 2013.
The source noted that snnual term negotiations between Tepco and Xstrata have already started, adding that a fixed price might be difficult to achieve amid falling Newcastle coal prices.
Tepco could not be reached for comment Monday.
The spot Newcastle coal price, basis 6,300 kcal/kg GAR, was assessed at $82.50/mt on June 21, compared with $113.50/mt on January 3, according to Platts data.
