RBC Capital Markets said that the report of cancellation by a Chinese buyer of an Australian coal cargo during shipment may not signal a slump in demand from power plant operators in the Asian nation.
Reuters citing unnamed traders reported that an Australian cargo is being offered after a Chinese customer pulled out of a sale. RBC Capital said that the product appears to be coking coal used by steelmakers that has been marketed as thermal coal.
Mr David Haddad a RBC analyst in a note to clients wrote that Chinese buying has almost single handedly sustained the international coal trade and prices. He added that early figures for June suggest Australian exports to China will be another record.
Mr Haddad further added that weaker global steel demand has let to dumping and rebadging of coking coal as power station fuel, mainly by suppliers based in Queensland state.
Sydney based Haddad said that “There is not enough evidence to suggest that Australia’s record coal trade with China is over and the market in general remains bullish on this trade.”
UBS AG said that power station coal prices in Asia may increase in 2010 because of higher demand from China.
Source: Bloomberg
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