Steelmakers and power companies will pay substantially less for coking and thermal coal from April 1 after the first deals in the annual negotiations settled for a price cut of up to 60 per cent.

The reduction is the first for the annual contracts since 2003 and signals further pressure for a large price drop in iron ore prices, which are being negotiated between Chinese steelmakers and global miners, Vale of Brazil, Rio Tinto and BHP Billiton.