Yanzhou sets 2007 coal price for Japan utilities
China’s Yanzhou Coal Mining Co. Ltd. has agreed to sell 200,000 tonnes of thermal coal to Japanese utilities at $75 per tonne FOB, a 15 pct rise on 2006 prices but a fraction of the volume sold last year, a source familiar with the deal said on Thursday.
Yanzhou exported around four million tonnes to Japan in 2006. This financial year’s tonnage is much lower because both Yanzhou and Japanese buyers wanted to avoid locking in large tonnage at $75, industry sources said.
Yanzhou had been seeking $80 FOB earlier this month, the sources said.
Traders said they thought Yanzhou wanted to sell most of its output on a spot basis into either the domestic or export market, depending on where the highest prices could be achieved.
Japanese utilities may end up buying spot coal from Yanzhou at higher prices than the $75 just agreed, they said.
“It’s such a silly deal. It might seem like the Japanese have gotten a good bargain but 200,000 tonnes is just a drop in the ocean and when you split it amongst the utilities, they are effectively hardly getting anything,” said a trader.
Coal miners in China’s north agreed 2007 term contract prices with Japanese buyers at $67.90 a tonne for around five million tonnes in May.