Global miner Glencore and Japan's Tohoku Electric Power agreed on a price of $109.77/t for supplies of thermal coal from Australia for the year through September 2019, according to a source with direct knowledge of the matter.
The agreed price, which serves as an industry benchmark for supplies of seaborne thermal coal in Asia, was 16% higher than the contract for the year through September this year.
Glencore has two annual supply contracts with Japanese utilities but talks with Tohoku Electric on supplies for April 2018-March 2019 broke down earlier this year, forcing other utilities to set their own prices in the opaque market.
Australian spot thermal coal prices have traded around six-year highs in recent months, pushed up by a summer heatwave across the northern hemisphere as well as output cuts in China, the world's biggest consumer of coal.
With annual imports of around 115 million tonnes, Japan is one of the world's biggest importers of thermal coal. Its utilities buy about 40% of all Australian exports of the commodity.
But volumes under long-term contract have been declining as utilities try to diversify supply sources and trade more in the spot market as part of Japan's energy market liberalization.
(Writing by Becky Du Editing by Tammy Yang)
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