JAKARTA, Feb 26 (Reuters) – Prices of power-station coal from Australia fell to below $67, the lowest in 17 ½ months, dragged down by growing signs of eroding demand and a building surplus, traders said on Thursday.
Coal prices at the globalCOAL Newcastle weekly index, a benchmark for Asia, were down 13.8 percent at $66.50 a tonne, the lowest since Sept. 12, 2007, from $77.23 a tonne a week earlier.
Supply in the coal market is building up as utilities are well-stocked and production has been smooth, a Sydney-based trader said.
“It’s getting more and more apparent that these excess stocks are not going to be soaked up,” the trader said.
The market had expected that China would be importing more coal to pressure domestic sellers during negotiations for annual prices but it has not happened so far as Chinese domestic demand remained very week, the trader said.
Low prices have attracted utilities to buy some spot cargoes with South Korean power plants scheduled to close a tender this week.
“There are very few transactions because both sellers and buyers are still reluctant to take big positions,” an Indonesian producer said.
Tenders expiring this week included one by South Korea’s East-West Power Co (KEWESPO) and another by Korea Midland Power Co (KOMIPO), seeking 500,000 tonnes and 1 million tonnes of coal respectively.
Two 15,000-tonne parcels for March delivery were traded at $69.75 and $69 a tonne respectively on Tuesday, while a 15,000-tonne parcel for May delivery was traded at $65.80 a tonne.
Two 75,000-tonne parcels for June delivery were traded at $64 and $65.50 a tonne respectively on Tuesday.
A 30,000-tonne parcel for April delivery was traded at $65 a tonne on Wednesday.
* INDONESIA BITUMINOUS COAL
Indonesian bituminous coal of 6,300 kcal/kg air-dried basis (ADB) was offered at between $71-$76 a tonne, FOB mother vessels from mines in South Kalimantan, Indonesian traders said.
Bituminous coal of 5,800 kcal/kg ADB, was offered at between $53-$61 a tonne, FOB mother vessels, from mines in South Kalimantan.
Some end-users are trying to negotiate with suppliers to delay delivery because of falling coal prices, an Indonesian producer said.
“Many end-users have locked in prices last year that are higher than current market prices. Delaying shipments would enable them to get cheaper coal in the spot market to minimise loses,” a producer said.
Indonesian sub-bituminous coal of 5,500 kcal/kg ADB was offered at prices ranging from $46 to $53 a tonne, FOB mother vessel from South Kalimantan mines, while 5,300 kcal/kg ADB was offered at $40 a tonne.
GLOBALCOAL SWAPS TRADES SINCE FEB 23 ————————————-
PERIOD WEDNESDAY TUESDAY MONDAY
FEB ’09 N/A $72 N/A
MAR ’09 N/A $63.50 N/A
MAY ’09 N/A $61.60 N/A
N/A $61.50 N/A
Q2 ’09 N/A $63 $65
2010 N/A $63
(Reporting by Fitri Wulandari and Fayen Wong; Editing by Ed Davies)