Xstrata Negotiates 13% Increase in Coal Price; Australian Stocks Up

Marcus Jacob
01 Apr, 2011
New York City

Australian stocks closed higher tracking gains in the commodities prices. Xstrata signed an annual contract to sell coal to Japanese utility at 13% higher price of $129.80 a ton. Biota won a five-year contract to supply flu drug to the U.S. for $231 million.

[R]5:00 PM Sydney – Australian stocks closed higher tracking gains in the commodities prices. Xstrata signed an annual contract to sell coal to Japanese utility at 13% higher price of $129.80 a ton. Biota won a five-year contract to supply flu drug to the U.S. for $231 million.[/R]

Stocks in Sydney trading gained after commodities prices increased and international markets showed a positive bias in the overnight trading. Rising production data from China also contributed to the sentiment.

The ASX 200 index increased 23.90 to 4,861.80 and the All Ordinaries Index gained 26 or 0.5% to 4,954.60.

The Australian dollar advanced to US$1.0343 and crude oil increased 46 cents to US$107.18.

Coal prices in the spot market traded higher after Japan based electric utilities signed contract for coal supplies at a higher prices. Xstrata agreed with Japan based Chugoku Electric for one year to sell coal at US$129.80 a ton.

The coal spot price soared 13% to US$123.20 a ton compared to previous price of $115 a ton for supplies to Japanese utilities.

Japan is expected to increase its coal imports as it relies more on other power sources after the earthquake and tsunami that caused radiation leak at a nuclear power plant. Japan imported 102 million tons of coals in 2010 and coal imports this year are expected to increase between 5 million tons and 8 million tons.

Stock Movers

Biota Holdings increased 37.5 cents to $1.43 after its U.S. subsidiary received US$231 million contract from the U.S. government to develop flu drug. The full funded five year contract is contingent of milestones. The company’s drug not only treats flu infection but also can also be used to prevent flu from spreading.

BHP Billiton increased 12 cents to $46.68 and Rio Tinto added 10 cents to $84.85.

Woodside Petroleum increased 60 cents to $47.40 as takeover rumors dominate trading sentiment in the stock.

Asciano, the operator of ports and rail terminals increased 1 cent to $1.75 after it priced US$1 billion of senior debt and the proceeds will be used to repay bank short term debt due May 2012.

Banks closed higher. ANZ increased 6 cents to $23.87 and Commonwealth Bank added 34 cents to $52.74 and National Australia Bank increased 13 cents to $25.98.

Austar United Communications increased 4.4% to $1.35 after the company and Foxtel have not reached an agreement to on the price of the merger deal.