Asia Coal-Australia thermal coal prices dip on Japan contract settlement

PERTH, Sept 28 Wed Sep 28, 2011 3:59pm IST

PERTH, Sept 28 (Reuters) - Australia's thermal coal price index fell in the past week, dragged down in part by top exporter Xstrata's recent settlement with Japanese utilities for an annual supply agreement beginning in October.

Thermal coal on the global COAL Newcastle index for the week to date closed at $122.20 per tonne on Tuesday, down from $123.66 per tonne a week earlier.

Xstrata's settlement price came in lower than the record of $129.85 per tonne for the 2011 benchmark annual contract starting April 1, and less than some in the market had expected.

"Once the Japanese contract was out of the way, a lot of the other markets fell away a little bit too," one Asia-based trade source said.

Slow demand from Japanese utilities continues to affect demand for Australian coal and prices. Coal demand from Japan has dropped sharply since March, when an earthquake and tsunami damaged some coal-fired power plants and infrastructure.

"In any normal year (Japanese utilities) would have had tenders and enquiries. Suppliers are shipping now at a normal pace, but there is just no extra inquiry because they have contracted what they intended to," one Australia-based market source said.

Still, many Australian producers have mostly sold supplies through December, the source said.

The increasing chance of a La Nina weather event forming in late 2011 could boost Australian coal prices. Last year, floods associated with a La Nina event pushed thermal coal prices to record highs.

In China, domestic coal prices rose to 832 yuan ($130.016) on Wednesday, according to the Bohai-Rim Bay thermal coal price index.

With winter approaching and Chinese prices moving slightly higher, Chinese buyers took several cargoes of South African Richards Bay coal, sources said.

In South Korea, Korea Western Power Co Ltd (WP) was seeking a combined 1.475 million tonnes of steaming coal via spot and term tenders. ($1 = 6.399 Chinese Yuan) (Editing by Miral Fahmy)

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

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

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