Asia Coal-Australia thermal coal prices up on annual settlement price

PERTH, April 5 Tue Apr 5, 2011 3:15pm IST

PERTH, April 5 (Reuters) - Australia's thermal coal prices rose during the past week, supported by a higher settlement for the annual Japanese thermal coal contract.

Thermal coal on the globalCOAL Newcastle index, a benchmark for Asia, closed at $123.75 per tonne for the week to date on Monday, up from $123 per tonne a week earlier and $121.13 on Friday.

Xstrata and Chugoku Electric settled the annual thermal coal contract for the Japanese fiscal year starting April 1, at a record level late last week, boosting prices more than $2 per tonne over the weekend. [ID:nL3E7EV499]

The contract was settled at $129.85, according to sources, well above the index price of $120.84 last Thursday when the contract was settled as Japanese buyers paid a higher premium for supply security in the wake of the deadly earthquake that shut several power plants last month.

Post-settlement, the market was relatively thin as Australian producers focused on settling their contracts with their long term customers. The settlement prices for other Japanese utilities are expected to be in line with the agreement reached between Xstrata and Chugoku.

"Most Australian producers, whatever coal they have, they are selling to the Japanese customers. I'm just not seeing much volume uncontracted," one Sydney-based source said.

Korea East West Power Co (EWP) is seeking sub-bituminous coal via spot and term tenders, which closed on Friday. South Korean buyers are still looking to buy thermal coal at a sizable discount to the settlement price,

Traders also said one South Korean reportedly paid $110 per tonne for a cargo of 5,900 kcal/kg coal NAR.

Chinese buyers were still largely said to be sitting on the sidelines, although one deal for Indonesian sub-bituminous coal was said to have been done around $84 per tonne.

Lower prices for domestic coal in China have limited import buying interest from the world's largest coal producer and consumer recently. [ID:nL3E7ET08C]

Earlier this week, China's state planning agency called on regions and enterprises to keep coal prices stable as its power utilities struggle with rising costs and the government wrestles with inflation. [ID:nL3E7F201Q]

In Europe, coal futures prices were pushed up on Monday on strong demand from Germany's power sector after Germany ordered seven nuclear reactors to be shut last month after the Japanese nuclear crisis. [ID:nLDE7331V1]

WEEK AHEAD

Traders said spot trades are likely to be few and far between for the next week as Australian producers and Japanese buyers settle annual thermal coal contracts following . The prices are typically set by Xstrata and a utility representing Japanese utilities, which this year was taken by Chugoku Electric Power.

The settlement price of around $130 was interpreted as relatively bullish for the Pacific market and traders and analysts said they would be looking for prices to inch up as the Japan emerges from the earthquake crisis.

ADDITIONAL REUTERS COAL COVERAGE:

RECURRING MARKET REPORTS

European physical market............

European swaps market...............

Australian spot prices..............

North America coal market...........

STOCKS AND IMPORT/EXPORT DATA

Australia Newcastle stocks..........

S. Africa's Richards Bay stocks.....

TRADES AND TENDERS Spot trades... [COAL/TRADE\]

Coal tenders...

COAL PRICES

McCloskeys weekly physical spot/freight prices...<0#MCC-CASH>

API4 coal paper prices, McCloskeys............<0#MCC-C-API4>

API2 coal paper prices, McCloskeys............<0#MCC-C-API2> (Reporting by Rebekah Kebede; Editing by Ed Lane)

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