Japanese utilities have agreed to a 40 percent increase in the price of Xstrata's (XTA.L: Quote, Profile, Research) Australian thermal coal over the next year, two sources said on Thursday, in another sign of consumers bracing for tight supplies next year.
The industry sources said the settlement at $78 a tonne for contracts running for 12 months from October 2007 set the stage for negotiations next year on the larger benchmark April-to-March fiscal year contracts, which were set at $55.65 this year.
"It is not far-fetched to say that annual contract prices will be at $80-levels next year, especially since negotiations for term-contracts normally begin in the first quarter," said Paul Gray, a commodities analyst at Goldman Sachs.
"And I can't think of what could push prices down in 2008."...MORE