Asian Coal Prices Show $5 per Tonne Fall

Prices of power-station coal from Australia, a benchmark for Asia, has fallen by more than $5 to just above $83 a tonne in the last week, after a spate of surprise deals pushed prices to a two-month high.

Although North Asian demand remained sluggish, producers and traders said there had been increased buying from Chinese utility firms, which are seeking overseas coal supplies to take advantage of lower prices, while Indian buyers are scouting for
bargains.

Thermal coal prices on the globalCOAL Newcastle weekly index fell $5.04 from a week ago to $83.15 a tonne in the week ended Jan. 31, based on free-on-board (FOB) prices at Australia's Newcastle port, the world's largest coal export terminal.

"Chinese customers have stepped up on spot purchases of Indonesian coal recently. They are out in the market to look for high quality coal, but there aren't a lot of spot supplies available," said an Indonesian producer.

Bituminous coal with a heating value of 5,800 kcal/kg (NAR) is being quoted in the range of the high-$60s to low-$70s on an FOB basis from Indonesia, said a producer.

With coal of similar quality being sold at about $90 a tonne, FOB Qinhuangdao in China, industry sources said even after including freight charges, Chinese utilities could still save at least $10 a tonne by buying coal from Indonesian miners.

Indian traders were also on the lookout for low quality coal, with low heating value and high sulphur, industry sources said.

A producer said several cargoes of coal with a heating value of less than 5,000 kcal/kg (NAR) were sold to Indian buyers at between $50 and $55 late last month.

Industry participants will be closely eyeing tender results of Korean Southern Power Co Ltd (KOSPO) as a gauge for market sentiment. The tender, which will close on Feb. 3, is seeking a total of 500,000 metric tonnes of thermal coal with a minimum heating
value of 5,350 kcal/kg (NAR) and 4,800 kcal/kg (NAR) for delivery between February and April.

A flurry of trades on globalCOAL, which saw several small parcels of Australian coal sold at a two-month high of near $96 a tonne, pushed index prices to above $88 late in January.

Source: Reuters