PERTH/TOKYO, Sept 28 Xstrata Plc and Tohoku Electric Power Co have settled a coal supply contract for the year beginning Oct. 1 at just under $97 per tonne, sources told Reuters on Friday.
The negotiations are held between a lead Japanese utility, in this case Tohoku, which negotiates on behalf of other Japanese utilities.
Tohoku agreed to buy Australian thermal coal from Xstrata at $96.90 per tonne, a level which will likely be followed by Japan's other utilities, according to market sources with knowledge of the negotiations.
The settlement price is over $10 per tonne more than the Australian thermal coal price benchmark, which closed at $85.10 per tonne on Thursday.
The October contract price is around 12 percent over the spot price.
While long-term contract prices are typically a few dollars above Australian coal spot prices, a premium usually explained by security of supply, the spread between the spot price and the contract price has been widening since the March 2011 Fukushima nuclear crisis.
Japanese utilities have been using coal-fired power to replace nuclear power lost after all 50 nuclear reactors were brought off line for checks in the aftermath of the crisis.
The price is also 23 percent lower than the $126.50 per tonne settlement for the October contract one year ago. This follows global coal prices, which have fallen sharply as demand, particularly from top consumer China, has waned. (Reporting by Rebekah Kebede in PERTH and Osamu Tsukimori in TOKYO; Editing by Ron Popeski)