Coal price drifts lower
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