From April 1 Australian contract steaming coal to Japan will be sold for $US28.75 a tonne, a 4% or $US1.20 a tonne cut. Prices were eventually settled after a four month negotiation between Japanese power utilities and Australian producers. This follows the 18% cut accepted last year and the 5% price drop for hard coking coal from $US41.90 per tonne (FOB) to $US39.75 per tonne.

The price cuts were in line with analyst predictions. Marginal producers are expected to bear the brunt of the decrease but the fall in the Australian dollar against the United States dollar will cushion the pain to some degree.

The steaming coal contract is still above the $20 a tonne spot market.