GO
Loading...

Asia Coal-Australia coal flat as Chinese buyers on holiday

Wednesday, 3 Oct 2012 | 9:33 PM ET

PERTH, Oct 4 (Reuters) - Australia's thermal coal price benchmark was relatively steady this week with Chinese buyers away from the market for a week-long national holiday, but prices may rebound soon as buyers begin to restock for winter.

Australia's Newcastle spot index for the week closed at $85.85 per tonne on Wednesday, up only slightly from $85.49 per tonne last week, according to data provided by online trading platform globalCOAL.

"We're in 'shoulder season' right now; but pre-winter restocking across northern hemisphere in November and December means we're probably close-to-a-low for these prices," UBS said in a note to clients this week.

The autumn season is often referred to as the "shoulder season" by those in the industry because it is in between the peak demand summer and winter seasons.

Xstrata Plc and Tohoku Electric Power Co's settlement of a coal supply contract for the year beginning Oct. 1 at just under $97 per tonne late last week, over $10 per tonne more than the benchmark at the time, suggests that prices will increase going forward, market sources and analysts said.

"Looking ahead, with thermal coal demand heading into seasonal highs in (the fourth quarter), we expect physical prices to pick up gradually," Standard Chartered said in a note to clients this week, citing a recent increase in buying enquiries from Chinese and Indian buyers.

Despite the absence of Chinese buyers due to the Golden Week holiday, a few cargoes of Newcastle coal changed hands.

A 25,000 tonne cargo for November delivery traded at $82.50 per tonne, the same price paid for an October cargo of the same size late last week, according to globalCOAL.

Offers for November cargoes later fell to $81.75 per tonne, the lowest level seen since December 2009.

Prices for cargoes for early next year were higher, with two 25,000 tonne cargoes for January 2013 delivery trading higher at $88.75 per tonne.

Korea Western Power Co Ltd was also in the market for deliveries of coal in late December and early January.

And with plentiful supply in the market, Korea East West Power Co (EWP) bought 710,000 tonnes per year for the next five years in term tenders, more than double the 265,000 tonnes per year it originally wanted to buy, for around $73 per tonne.

(Reporting by Rebekah Kebede; Editing by Himani Sarkar)

((rebekah.kebede@thomsonreuters.com)(Mobile: +61 402 974 273 Reuters Messaging: rebekah.kebede.thomsonreuters.com@reuters.net))

Keywords: CHINA COAL PRICES/