Asia Coal-Australia thermal grades at 2010 high above $118/T

Tue Dec 14, 2010 11:32am IST

* Queensland rain disruptions boost thermal coal prices

* Newcastle export operations unaffected by rains

By Rebekah Kebede

PERTH, Dec 14 (Reuters) - Australia's thermal coal prices, a benchmark for Asia, rose to a 2010 high above $118 per tonne during the past week, as torrential rains in the key Queensland state disrupted output.

Thermal coal on the globalCOAL Newcastle index for the week to date was $118.75 per tonne on Monday and the highest since April 2008. Prices were up from $116.22 a week earlier and up nearly $3 from $115.81 on Friday.

Although Queensland produces mostly coking coal used for steel-making, a number of mines also produce thermal coal used for power generation.

While the focus is currently on Queensland's Bowen Basin, the whole eastern seaboard of Australia has been affected by wet weather and is expected to continue being impacted as the wet season continues, analysts said.

"Wet weather will not only affect metallurgical coal but also thermal. And I have also heard people forecasting cold winters in China and Europe. This fear from the demand side, combined with supply side fears has people scrambling to make sure their stockpiles are full," said one analyst, declining to be identified.

Coal supplies in Australia and Indonesia, both major exporters, will likely remain tight with producers in both countries experiencing output disruptions due to unseasonal wet weather.

"I just don't see much available in the first quarter of next year.... as far as Indonesia and Australia goes, I just don't see the coal," said one producer source.

Still, coal exports from New South Wales' Newcastle Port, the largest thermal coal export port continued normally during the past week, unaffected by the wet weather that disrupted exports in neighbouring Queensland.

A cold snap in Europe has also continued to support prices, but traders said this was primarily due to bullish sentiment due to the freezing weather and coal's reaction to moves in other markets rather than European physical need for coal. ID:nLDE6BC1RR]

Prompt physical coal prices rallied by between $1.50 and $2.00 a tonne, in line with other commodity markets, on strong economic data from China and a rise in oil prices.

WEEK AHEAD

Queensland rains and their impact on coal production are likely to dominate the headlines in the coal market. Continuing rains could further disrupt coal production, transport, and exports and deplete stockpiles.

Traders will also keep a close eye on European winter weather, which has played a major role in lifting prices in recent weeks. (Reporting by Rebekah Kebede; Editing by Manash Goswami)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

India-WTO Standoff

India-WTO Standoff

India threatens to derail WTO deal, prompts angry U.S. rebuke  Full Article 

Economic Pulse

Economic Pulse

New govt promises low and stable tax regime for economic revival.  Full Article 

IPO Probe Ends

IPO Probe Ends

Facebook says SEC's IPO probe ends, extending WhatsApp closing date  Full Article 

World Stocks

World Stocks

Goldman Sachs downgrades stocks to neutral for short term  Full Article 

Disappointing Results

Disappointing Results

Amazon's far-reaching ambitions, lack of profits, unnerve investors  Full Article 

Global Growth

Global Growth

IMF cuts outlook, warns of stagnation risk in rich nations  Full Article 

Market Eye

Market Eye

Nifty retreats from record highs on profit taking.  Full Article 

Waning Enthusiasm

Waning Enthusiasm

Markets' post-election enthusiasm lost on consumers.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage