Xstrata also recently settled a Japanese utilities thermal contract at $98/t, basis 6,322kc GAR for deliveries in Apr'10-Mar'11 period,representing a 39%increase vs.last year's reference price of US$70.5/t.
Exports to Japan typically account for about 20-25%of Indonesian company's total sales.However,the reference price usually sets the tone for other contract negotiations in the region,and thus bodes well for ASP outlook of Indonesian coal companies.
The above ref price exceeded DB's 2010 forecast of US$85/t.If we were to assume a US$100/t benchmark on all the unpriced /index-linked volumes this year,this would suggest some earnings upside to our top coal picks ITMG &PTBA of 19% and 13%respectively.Meanwhile,the implied earnings upside to Bumi would be 57%,due to the higher financial leverage and larger portion of unpriced volumes
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