Glencore share price: Miner cuts thermal coal price for Japan’s Tohoku by 17 pct

Mining group Glencore Plc (LON:GLEN) has set the price of its annual contract to supply Japan’s Tohoku Electric Power Co (TYO:9506) with Australian thermal coal by 17 percent less than last year’s deal, Reuters reported today, quoting three sources.

Shares in Glencore gained 2.74 percent to 288.45p as of 14:13 BST in London today while the FTSE 100 blue-chip index was up 1.45 percent at 6,932.55 points.
According to Reuters, Glencore and Tohoku have agreed to a price of $67.80 per tonne for the fiscal year beginning April 1, in surprise news for the market, the two parties having previously failed to find common ground.
“The agreed price came a bit too high, but I guess Tohoku was obliged to accept it in order to secure a stable source of high-quality coal,” Reuters quoted a buyer as saying.
Generally, Japanese utilities buy most of the coal they use from Australia under annual supply agreements.
The news is surprising because according to the Financial Times last week, Rio Tinto (LON:RIO) had reached agreement with Tohoku. Glencore and the Japanese utilities failed to reach an accord up to today’s news which had allowed Rio to take over the lead in the negotiations. According to the FT, Glencore had pushed for a price of $75 per tonne while Tohoku was willing to pay around $65, with Glencore apparently deciding to meet the Japanese firm’s offer to secure the contract.
As of 15:04 BST, Tuesday, 07 April, Glencore Xstrata PLC share price is 289.38p.