PERTH, Sept 14 (Reuters) - Australia's thermal coal price
benchmark fell to just over $91 per tonne in the last week as
ample supplies and continued weak demand from China and other
buyers weighed on prices.
Australia's Newcastle spot index for the week
closed at $91.01 per tonne on Thursday, down 72 cents from the
same time last week, according to data provided by online
trading platform globalCOAL.
"There's just too much supply for the fourth quarter," a
Singapore-based market source said.
Four parcels of 25,000 tonnes of Newcastle coal for December
delivery traded this week at prices ranging between $91.40 per
tonne on Friday and $93 per tonne earlier in the week.
The Chinese weekly benchmark thermal coal prices on the
Bohai Bay Rim index rose slightly to 630 yuan ($99.53) a tonne
FOB from 628 yuan last week.
The supply overhang is expected to continue unless there is
a significant pick-up in global economic growth.
"We still expect the increase in global thermal coal export
capacity in 2012/13 to slightly outpace demand growth, causing
the market to remain in a state of slack," Paolo Coghe, an
analyst with Societe Generale in Paris told clients in a note
this week.
Although Chinese buying interest in standard-grade
Australian coal with a heating value of 6,000 kg/kcal remained
weak, Chinese demand for lower-grade coal with a heating value
of 5,500 kg/kcal was heating up slightly, the market source
said.
Some term buying via tenders continued from South Korea.
Korean Southern Power Co Ltd (KOSPO) is seeking 65,000
tonnes of steaming coal for November 1-30 delivery via a tender,
while Korea East West Power Co (EWP) has bought 1.56 million
tonnes of steaming coal per year for 2012-2017 via term
tenders.
News of further production and job cuts by Australian coal
producers also added bearish sentiment to the thermal coal
market, market sources said.
The world's biggest miner, BHP Billiton, announced
early this week that it would stop production at its Gregory
coking coal mine in Queensland.
Xstrata, the world's largest producer of seaborne
thermal coal, said in a statement this week that a significant
portion of the Australian thermal and coking coal industry is
losing money at current prices.
Although coking coal, used for steelmaking, and thermal
coal, which is used for power generation, are largely separate
markets, low-grade coking coal and high-grade thermal coal are
sometimes substituted for each other and supply and demand
impacts can flow from one market to the other.
($1 = 6.3296 Chinese yuan)
(Reporting by Rebekah Kebede)
(rebekah.kebede@thomsonreuters.com; Mobile: +61 402 974 273
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rebekah.kebede.thomsonreuters.com@reuters.net)
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