Glencore Selling Coal to Japanese Utilities at Lowest Prices in 6 Years

Bloomberg reported that Glencore Plc (NYSE:GLEN) is selling coal to Japanese utilities at $70 per metric tonne, the lowest price since 2009. Competition from other energy sources has driven down prices, according to the news outlet.

As quoted in the publication:

The slump in oil and LNG prices and the prospect of nuclear reactors restarting in Japan is undermining demand for coal. Glencore said it will trim Australian production and consider shutting South African sites amid a global glut estimated by Credit Suisse Group AG to be 38 million tons this year, or about 4 percent of global trade.

“With oil and gas prices falling drastically, the competitiveness of coal is being whittled away,” said Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “That’s certainly going to play a part in discussions this time.”

The price Japan’s utilities negotiate with Glencore is used as a benchmark for accords across Asia, and is typically settled at a premium to spot coal, which ended 2014 at $64.81 a ton after sliding 25 percent over the year. Spot prices closed at $60.56 in the week ended March 20 after climbing as high as $73.70 in February, Globalcoal data show.

Click here to read the full Bloomberg article.