Coal price drifts lower

The Weekend Australian - Travel - - Resources -

THE price of power sta­tion coal at Aus­tralia’s New­cas­tle port, the world’s largest ex­port har­bour for the fuel, has fallen for a sec­ond week as the end of the north­ern hemi­sphere sum­mer re­duced de­mand. Coal for im­me­di­ate de­liv­ery at New­cas­tle de­clined 2 per cent, or $1.38, to $68.57 a tonne in the week ended Au­gust 24, ac­cord­ing to the glob­alCOAL NEWC In­dex. Prices reached a record of $72.37 two weeks ago, breach­ing the pre­vi­ous high of $70.88 in June.

‘‘ Prices have drifted a bit lower, as we’re in a sit­u­a­tion where de­mand has started to slacken and we would ex­pect In­done­sian pro­duc­ers have started to come back on­line,’’ said Ger­ard Burg, min­er­als and en­ergy econ­o­mist at Na­tional Bank in Melbourne. ‘‘ Prices may con­tinue to drift lower un­til the point when con­sumers look to re­stock,’’ ahead of the win­ter sea­son.

De­mand for coal used in power gen­er­a­tion plants reaches its sum­mer peak in China, Ja­pan and South Korea in July and Au­gust as air­con­di­tion­ing us­age rises.

Sup­plies be­came tight when heavy rain caused some In­done­sian pro­duc­ers to de­clare force­ma­jeure and an earth­quake in Ja­pan on July 16 led to Tokyo Elec­tric Power, Asia’s big­gest power pro­ducer, in­creas­ing the use of gen­er­a­tors fired by coal and gas to com­pen­sate for out­put lost af­ter the clo­sure of a nu­clear plant.

The cur­tail­ing of ship­ments from In­done­sia and in­creased de­mand from Ja­pan added more pres­sure on Aus­tralian sup­plies, al­ready strug­gling to over­come bot­tle­necks at the port and on the rail sys­tem.

Rio Tinto, BHP Bil­li­ton and Xs­trata Plc have been un­able to in­crease ship­ments enough to ful­fill or­ders af­ter China boosted im­ports and cut ex­ports to meet de­mand.

About a third of Aus­tralia’s coal ex­port ca­pac­ity is at New­cas­tle. The na­tion risks los­ing as much as $7.9 bil­lion in ex­port rev­enue in the next decade if port and rail con­ges­tion aren’t re­solved, ac­cord­ing to gov­ern­ment fore­casts.

The num­ber of ships wait­ing to load coal at New­cas­tle fell to 50 this week New­cas­tle Port Cor­po­ra­tion said on its web­site. Ves­sels waited an av­er­age of 19.7 days to load coal com­pared with 19.3 the week be­fore, it said.

It took, on av­er­age, 23 hours to load gen­eral cargo, the port said. This week a to­tal of 1.67 mil­lion tonnes of coal was shipped, more than the 1.44 mil­lion tonnes of a week ago, New­cas­tle Port said.

Banpu ended its force­ma­jeure in its Jorong mine in In­done­sia’s Kal­i­man­tan re­gion mid­month and aims to nor­malise op­er­a­tions next month, Philip Gas­teen, head of mar­ket­ing and lo­gis­tics at Banpu, said. Jorong mine has an an­nual ca­pac­ity of 3.5 mil­lion tons.

Straits Asia Re­sources, a Sin­ga­pore-listed com­pany with coal mines in In­done­sia, an­nounced on July 31 it would miss ship­ments and has yet to lift its force ma­jeure .

China’s coal im­ports surged 50 per cent to 30.96 mil­lion tonnes in the first seven months while ex­ports fell 21 per cent to 28.86 mil­lion tonnes, the cus­toms ad­min­is­tra­tion said mid­month.

Lower ex­ports from China are prompt­ing South Korean power util­i­ties to buy coal from other coun­tries.

Korea Mid­land Power, a unit of South Korea’s largest util­ity, is seek­ing 360,000 tonnes of ther­mal coal for de­liv­ery in the fourth quar­ter for its Bo­ryeong power plant, ac­cord­ing to ten­der doc­u­ments sent out to traders re­cently.

Korea South­ern Power wants 300,000 tonnes of ther­mal coal for Oc­to­ber to March 2008 de­liv­ery, ac­cord­ing to its web­site.

Spot coal prices were also boosted in June by storms that closed New­cas­tle port and dam­aged the rail track net­work. About 2.5 mil­lion tonnes of ex­port ca­pac­ity was lost be­cause of the dis­rup­tions.

Rio Tinto, BHP Bil­li­ton and Xs­trata are among min­ing com­pa­nies that ship coal through the port. Bloomberg

New­cas­tle coal: Prices ease, but de­mand still out­strips port ca­pac­ity

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.