Reported by Reuters, the CFE contracts were awarded by the state-owned power monopoly to five companies, including Glencore, Vitol, RWE Supply and Trading, and Noble Group, which has a 21.7% stake in Gloucester Coal.
The news service said the prices were between $US71/t and $84/t, on delivery to Mexico’s Pacific Coast.
Macquarie analysts said the deals covered deliveries over the next four years.
Using an average price of $US79.69/t for the agreements, the analysts said the free on board equivalent price of coal delivered from Newcastle would be in the range of $70-72/t.
“That puts the result at a similar level to recent contract settlements in Japan,” Macquarie said.
“CFE has tended to pay a premium to the spot market because it demands restrictive contract terms from its suppliers.”
Newcastle thermal coal spot prices have shrunk less than 1% in the week ending Friday, to $60.79/t.
South Africa’s Richards Bay has not changed this week, with the globalCOAL RB index remaining at $63.30/t.
The globalCOAL DES ARA index, considered to be South African spot thermal coal prices plus freight, fell 2.38% in the week, to $65.63/t.
Reports have emerged Japanese utility Tohoku has agreed to the same contract price with Xstrata as Chubu Electric, at $70.50/t. With Rio Tinto reportedly settling with Chubu at similar prices, other coal majors are expected to follow suit.
