Xstrata has raised benchmark coal prices with the finalising of a thermal coal contract price with a major Japanese utility customer.
As a result of the deal, which states that for the next 12 months Xstrata will sell coal to the utility for $98 a ton, benchmark prices for coal have risen by 40%.
The increase is mainly attributed to rising demand in Asia.
Xstrata was holding out for $100 a ton or more for Japan’s 2010 fiscal year thermal coal contract starting April 1 while the utilities hoped to lock in prices around $90.
China is also hungry for coal – its customs data shows that coal imports more than doubled to 13.1 million metric tons in February due to power demand.
Thermal coal prices to China on delivered terms reached as high as $120 a metric ton in January from less than $90 a year earlier.
Xstrata added that negotiations with other Japanese customers would continue from 5 April.