Reuters reported a worsening supply outlook has Xstrata asking for as much as $78 a tonne but industry sources claim the Japanese will counteract with an offer of below $70/t.
Previously Xstrata offered coal at prices of about $69–71/t in the October 2007 to September 2008 annual contracts negotiations; however, it upped the price after a recent bull-run in forward 2008 coal prices on the globalCOAL index, sparked by an expected worsening supply situation next year.
An all-time high coal swap price of $79.75/t was realised on October 18.
The Reuters report said coal prices are unlikely to ease and that in delaying the settlement of contracts Japanese utilities may find themselves in a weaker position to negotiate.
It speculates that rising domestic coal prices in China could encourage Chinese producers to retain their stocks locally, impacting the export market further.
According to Reuters the negotiations will continue and coal giant Rio Tinto Coal has yet to reveal its asking price.
