TOKYO: Japanese utility Tokyo Electric Power Co. has opted for a floating market price for its 2016 supply contract for Australian thermal coal, several market sources said Friday.
The reference price for the January-December contract is believed to be trading platform globalCOAL’s floating index for Newcastle 6,000 kcal/kg NAR thermal coal, said a number of market sources.
It is the second straight year Tepco has agreed to a floating contract price with its major Australian supplier Glencore for imported thermal coal, sources said. “There hasn’t really been a fixed-price January contract negotiated since 2014,” said another market source.
For the first time in its negotiations with Australian suppliers, Tepco handed responsibility to Jera, a 50:50 joint venture between Tepco and Chubu Electric Power, another major Japanese utility. Several market sources said Jera was responsible for all of Tepco’s imported thermal coal buying, including its January and July annual requirements.
Jera took over fuel buying for Tepco and Chubu on October 1. Their total demand for thermal coal imports is about 17 million-18 million mt/year, and there are plans to expand this through coal trading with third parties, according to company data.
Chubu Electric had a joint venture with the trading arm of European utility EDF — Chubu Energy Trading — that did its thermal coal buying and was effectively the forerunner of Jera.
The Tokyo-based joint venture is to gradually assume responsibility for all of the two utilities’ supply chain management for imported fossil fuels and of their investment in overseas coal mines, according to information on Jera’s website. Glencore could not be reached for comment Friday. Tepco spokesman Satoshi Togawa referred questions to Jera, which was not available for comment Friday.
