(Bloomberg) -- Glencore Plc, the mining and commodity trading giant, agreed to supply coal to a Japanese customer at one of the highest prices ever paid by the nation, threatening to further accelerate inflation.

Nippon Steel Corp. agreed on an annual supply deal through March with Glencore for power plant coal at $375 per ton, according to people with knowledge of the deal, who asked not to be identified because the information is private. The agreement is likely one of the most expensive coal contracts ever signed by a Japanese company, one of the people said.

Spokespeople for Glencore and Nippon Steel declined to comment.

Global competition for coal and natural gas is escalating as power generators move to secure additional fuel shipments amid an energy crunch. Utilities are curbing imports from Russia due to the war in Ukraine, tightening the amount of available supply and sending prices surging.

Japan has been struggling with strained electricity supplies and high demand during a recent heat wave. Nippon Steel, which uses fuel to power its industrial sites and supplies electricity to Japan’s grid, earlier this month purchased the country’s most expensive ever natural gas shipment. 

Read more: Japan Buys Most Expensive Gas Shipment as Energy Crunch Bites

The Glencore deal may be used as the benchmark price for other annual supplies by thermal coal users in Asia, the people said. That will boost the cost to generate electricity, and threatens to increase power bills for businesses and households.

Australian Newcastle coal futures closed at $410.45 per ton on Tuesday on ICE Futures Europe, and touched a record earlier this year. European coal futures for next year rallied to an all-time high on Tuesday as Russia threatens to curb gas supplies to the continent.

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