TOKYO, Oct 2 (Reuters) - Mining group Glencore Xstrata Plc GLEN.L and Japan's Tohoku Electric Power Co 9506.T have settled an annual Australian thermal coal import contract 12 percent lower than a year earlier, two sources with direct knowledge of the matter said on Friday.
The price set for the year beginning on Oct. 1 was set at around $64.60, the sources said, reflecting a supply glut for thermal coal worldwide.
Australia is by far the biggest supplier to Japan, accounting for about 76 percent of Japan's thermal coal imports in the first eight months of this year. ID:nENN4SOZ0C
The price set by Tohoku and Glencore will likely be followed by other Japanese utilities.
Annual contracts starting in October account for about 20 percent of Australian thermal coal imports to Japan, covering about 22 million tonnes, according to the sources.
Thermal coal benchmarks hit record lows earlier last month due to a sharp slowdown in demand, especially in Asia, and with overall mining output remaining stubbornly high. ID:nL5N11L02O
Asian benchmark thermal coal from Australia's Newcastle terminal GCLNWCPFBMc2 has fallen about 13 percent this year, last settling at $55.72 a tonne. The price has lost more than 60 percent since early 2011.
A Tohoku spokesman said it had reached an agreement with Glencore, but declined to comment on the price or other details of the contract.
Japan burns coal at record levels after the Fukushima disaster decimated public trust in nuclear power.
Japan power companies consumed 5.82 million tonnes of coal in August, up 1.9 percent from a year earlier and marking the highest for any month, data from the Federation of Electric Power Companies of Japan showed last month. ID:nENNF9A0SI
In addition, 40 more coal stations are planned to build in the next decade as the country opens up its retail electricity market from next April, exposing 10 regional power monopolies to new competition. ID:nL3N0YG1H0