Asia Coal-Prices fall to near $83/T, China in focus

Kalimantan Coal

PERTH, Feb 2 (Reuters) – Prices of power-station coal fromAustralia, a benchmark for Asia, fell more than $5 to above $83a tonne in the latest week, after a spate of surprise dealslate last month 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. Industry sources said Chinese utilities were likely
attracted by the steep price discount that overseas coal offers
compared with domestic coal prices. Bituminous coal with heating value of 5,800 kcal/kg (NAR)
is being quoted in the range of high-$60s to low-$70s on a 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
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. Macquarie said in a research note last week that the string
of above-market deals were likely spurred by traders scrambling
to find physical coal to secure contract obligations, after
rain and equipment issues at Australia’s Hunter Valley
disrupted some coal production.
(Editing by Ramthan Hussain)

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