DOW JONES NEWSWIRES

Canada's Teck Resources Ltd. (TCK) said Tuesday that it expects higher annual coking coal contract prices in 2010-11, but also foreshadowed a move away from an annual pricing structure to reflect new major importer China's tendency to buy coal on the spot market.

Teck said the next round of talks to set annual prices from April 1, the start of the Japanese financial year, were at a preliminary stage, but current market sentiment indicated prices would rise compared with 2009-10. Analysts are tipping contract price rises of 35%-40%.

Last year, China emerged as a major coking coal importer after a number of domestic mines were shut due to a safety clampdown and lower coal prices, turning the country into a surprise net importer at a time of flagging demand elsewhere.

China accounted for about 20% of Teck's 2009 coking coal sales, which totaled 19.77 million metric tons, and the company expects strong exports to continue this year, a spokesman said.

"China stepped in as a big buyer last year, and it tends to buy on the spot market. That alone is going to push us to a shorter pricing cycle," said the spokesman, who declined to comment on shorter-cycle sales to other customers.

"We...expect that a portion of our sales volume in 2010 will be priced on a shorter pricing cycle as opposed to the traditional coal year. A shorter pricing cycle would create more frequent adjustments to coal prices during the year," Teck said in its fourth quarter results statement.

Last year, sales to new markets such as China were priced based on prevailing market conditions in contrast with typical annual contracts, Teck said.

Global miner BHP Billiton Ltd. (BHP) is pushing to drive the pricing of coking coal away from annual negotiations toward spot prices, mirroring its successful efforts for iron ore talks.

"Spot prices are likely to continue to rise, so it's not surprising that most miners prefer to sell on spot," said National Australia Bank commodity economist Ben Westmore.

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