HUNTER coal companies are in for a harder year financially after Japanese electricity companies secured an 11per cent cut in the annual benchmark price for Newcastle thermal coal.
This year’s benchmark price of $US115.20 ($112.90) a tonne compares with last year’s of $US129.85 ($127.25).
It could cut $1billion from this year’s Hunter coal earnings.
Despite the cut, the price is still high compared with the pre-minerals boom prices.
The new benchmark was set in recent talks in Japan between Xstrata Coal and Tohoku Electric.
The companies involved have not commented but the price has been widely reported in the international financial press.
About 80per cent of the 114million tonnes of coal exported from Newcastle last year was thermal coal for power stations.
The other 20per cent was mostly semi-soft coking coal for steelmaking, which has been selling recently at $US150 ($147) a tonne.
Based on those prices and coal types, last year’s exports from Newcastle had an indicative value of about $14billion.
The latest edition of the McCloskey Coal Report says the benchmark settlements ‘‘account for the bulk of contract tonnage supplied from Australia and also influences the majority of tonnes sold to Japan’s industrial sector’’.
Although the price was 11per cent down on last year’s contract price, it was above recent ‘‘screen’’ prices for one-off or ‘‘spot’’ cargoes of similar quality Newcastle coal, which were selling for about $US107 ($104.75).
Internationally, the Newcastle settlements have been interpreted as ‘‘putting a floor under’’ a period of steadily falling coal prices, which the Financial Times blamed on ‘‘oversupply on the back of cheaper natural gas prices’’.
Newcastle’s three coal loaders exported about 30million tonnes in the first three months of the year, implying a potential annual total of 120million tonnes.