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Asia Coal-Prices fall below $94; Chinese buyers on the sidelines |
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Thursday, 11 March 2010 |
 Australia's thermal coal prices, a benchmark for Asia, fell 2 percent to below $94 a tonne this week, as sluggish demand from China foiled sellers' hopes that the world's largest coal consumer would swiftly revive their buying spree.
However, prices remain supported by demand from South Korea, while
ongoing contract talks between top thermal coal exporter Xstrata Plc and
Japanese utilities have also helped keep a floor on prices.
Thermal coal prices on the global COAL Newcastle weekly index fell $1.92
from a week ago to $93.67 a tone free-on-board (FOB) Australia's
Newcastle port on Wednesday. "There's some demand from Korea because of
the disruptions to Queensland shipments, so the end-users are looking
for prompt cargoes to cover those delays," said a Sydney-based trader.
"But prices have stopped going up because the market has accepted the
reality that the Chinese buyers aren't going to come back so soon
because they are all well stocked and domestic prices are falling."
Coal prices in China posted its fourth consecutive week of decline and
lost 2.6 percent this week. Top quality coal with a calorific value of
6,000 kcal/kg was down to 730-740 yuan ($105.50-$108.40), compared with
740-750 yuan last week, according to Qinhuangdao Seaborne Coal Market.
In a further sign of slowing domestic demand, stocks at China's
Qinhuangdao coal terminal have also jumped about 50 percent since the
start of the year to 818 million tonnes. "Chinese buyers would only be
interested in overseas supply if it was cheaper, but thats not the case
at the moment," said a second trader. "They may stay out of the market
for awhile as we're now entering a season of low demand."
Still, market sources said Asian supplies of quality bituminous coal
remains tight amid weather-related disruptions in Australia and
Indonesia. Wet weather has slowed mining and coal transport in both
countries, causing a backlog of ships to build up at ports in
Indonesia's Kalimantan region and the Dalrymple Bay terminal in
Australia's Queensland state. The deluge of rain has also prevented
Xstrata from lifting its force majeure declarations on the Rollestone
thermal coal supplies, which have been in place in Feb. 18. On contract
talks, trade sources said there has been little progress between
Xstrata and Japanese utilities on 2010 price discussions.
Xstrata has proposed to sell 2010 supplies at $100 a tonne, but Japanese
utilities are still biding their time. "Spot prices are still very
high and we think they may come off further over the next few weeks, so
we're just going towait-and-see," said a source from a Japanese utility.
Source: Reuters
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