A key negotiation towards the market price of thermal coal over the next 12 months has turned out nicely for miners, with the price set 38% higher than a year ago.
Talks between Glencore and Tohoku Electric Power, which effectively set the price for most of the Australian thermal coal sold to Asia, resulted in a price of US$84.97 a tonne, up from the US$61.60 a tonne price secured last year, according to multiple sources.
The news will be warmly welcomed by Hunter Valley miners, who have been stuck at the long-term contract price of US$61.60 a tonne for the last 12 months, despite the spot price for thermal coal rising to almost US$110 a tonne during that period.
The newly-negotiated price is the highest established in the last four years. The price was set at US$95 a tonne in 2013.
According to The Financial Times, traders believe around 75 million tonnes of coal is priced off the agreement each year.
The spot price for thermal coal was roughly US$76.50 when Glencore and Tohoku agreed to the US$84.97 contract price around May 8.