Xstrata, one of the world's biggest coal exporters, has come to an agreement from today to sell Australian thermal coal to Hiroshima-based Chucogu Electric Power for one year at $129.80 a tonne it was announced.
The new benchmark price contracted per tonne, which is around 30 percent up from the previous year, is an all time high for thermal coal under annual contracts and exceeds the previous 2008 record of $125.
The price for thermal coal supply in 2011 is 13 percent higher than the earlier settlement of $115 a tonne between Xstrata and Japanese utilities, and surpasses the current spot value for Australian coal of $123.20.
Original negotiations led by Tohoku Electric Power came to a halt after it sustained damage to its power plants following the damage caused by the earthquake and tsunami last month.
Analysts speculate this could be an indication that the coal market will tighten over the next few months as Japan compensates for a reduced nuclear power output by burning more coal.
It remains unclear as yet how high the volume will be under the contract.