Asia Coal-Prices fall to a 5-wk low on tepid demandadmin
Coal prices for power generators at Australia’s Newcastle port, a benchmark for Asia, fell to a five-week low of below $125 a tonne, due to tepid spot market demand and increased supplies from China.
Thermal coal prices fell $5.22 from a week earlier to $124.36 a tonne, the globalCOAL’s NEWC weekly index showed in the week ended March 21, based on prices at Australia’s Newcastle port.
Prices for prompt-delivery thermal coal, which galloped to a record-high of $150 a tonne for a spot deal struck in early February, have dropped by about $25, about 17 percent in the past month, as urgent demand from most North Asian utilities eased following a buying frenzy last month.
The resumption of some exports from Australia and China, combined with a decline in winter heating demand with the arrival of spring, have also put downward pressure on prices.
Industry sources said Korean utilities were relatively well stocked with about three weeks worth of coal supplies, while most Japanese utilities have enough coal to burn until late April.
“The spot market has been very quiet. There are hardly any spot trades and most buyers appear to be quite well stocked,” said a sales manager at a major Indonesian coal producer. He declined to be identified due to company policies on speaking to the media.
“Australian producers have also put in a provisional price arrangement with Japanese utilities for 2008 supplies. That’s further dampening demand since the utilities don’t have to shop for supplies in the spot market.”
After suspending exports for nearly three weeks due to the expiry of licenses, Chinese coal producers, such as Shenhua Energy Co Ltd 1088.HK and China Coal Energy Co 1898.HK 601898.SS, resumed limited exports last week after the government issued new export quotas for 2008.
China last Monday issued its 2008 coal export quotas at 53 million tonnes, down 24 percent from its quota a year ago as the government aims to channel production to its own fast-growing economy [ID:nL17520259].
Industry sources said China’s steep cut in export quotas would hurt Japanese utilities badly as they were in the process of negotiating for 2008 supply contracts with both Australian and Chinese miners.
“They will be squeezed on both fronts and there won’t be anywhere for them to seek refuge,” said a Singapore-based coal coal trader.
Industry sources said Chinese producers were asking about $130 a tonne for the export of its top grade thermal coal, free-on-board Qinhuangdao, China’s largest coal port.