Asia Coal-Australia thermal coal prices inch up in week

PERTH, June 8 Wed Jun 8, 2011 4:03pm IST

PERTH, June 8 (Reuters) - Australia's thermal coal prices rose slightly in the week to Tuesday, but stayed in the recent range below $120 per tonne as the market looked to a recovery in Japanese demand.

Thermal coal on the globalCOAL Newcastle index for the week to date was $118.43 per tonne on Tuesday, up 93 cents from $117.50 a week earlier, but down from $119.34 on Friday.

"The market is caught in a range right now," one Singapore-based market player said.

Newcastle coal for July delivery was traded at $118.75 per tonne early Tuesday on the globalCOAL screen.

Prices have been depressed since several Japanese utilities were forced to shut coal-fired plants due to the tsunami that hit the nation in March and some estimate yearly coal demand will be cut by about 10 million tonnes. [ID:nL3E7GV2E5]

"It's been a hard slog through the quarter," one Sydney-based market source said, but added that the return of Japanese demand, which some expect in the next few months, would boost prices. But in the meantime, some producers were being forced to sell coal to Chinese buyers at cut-rate prices.

"In historic years, you'd have interest in spot from Japan, but I think they are going to be 10 to 15 million tonnes down easy," the source said.

Still, Japanese utilities have shown signs of entering back into the coal market, with some producers saying major Japanese are now indicating interest in cargoes and exports were up at Australia's main thermal coal export port in Newcastle.

The market was also focused on Chinese import demand, which has increased in the wake of looming power shortages in the world's biggest producer and consumer of coal.

Beijing said last week it would move to encourage imports, which spurred speculation that it would cut import taxes, but industry sources said such a move is unlikely as it would only drive up international prices and in turn erase the price advantage of overseas supplies. [ID:nL3E7H71IY]

Despite import taxes, Chinese buyers have been on the hunt for deals in both Australia and Indonesia.

Chinese buyers were looking to buy Australian coal mostly at cut-rate prices, sources said. Most recently Chinese buyers were seen buying Indonesian coal of 4,850 kcal/kg NAR coal for $90 tonne FOB.

To keep domestic prices in check, China announced plans to impose heavy fines on thermal coal producers if they have been found to have raised prices in violation of state guidelines.[ID:nL3E7H70C9]

ADDITIONAL REUTERS COAL COVERAGE:

Reuters coal data guide..............

All coal news........................

Power and gas news...................

RECURRING MARKET/DATA REPORTS

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

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

China monthly coal import/export....

Coal Freight prices.................

TRADES AND TENDERS

Spot trades...

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>

Indonesian Govt Coal Benchmark................<0#COAL-ID> (Editing by Ed Lane)

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