Saturday, March 7, 2009

Asia Coal-Prices fall near 21-mth low, oil to give support

JAKARTA, March 5 (Reuters) - Prices of power-station coal from Australia, a benchmark for Asia, fell below $63 a tonne, the lowest in nearly 21 months, as weak global demand led to a build-up in supply.
 But a jump in the competing oil market was expected to offer support.
 Thermal coal prices on the globalCOAL Newcastle index dropped $4.34 to $62.17 a tonne, the lowest since June 14, 2007, from $66.51 a tonne a week earlier. "Sellers and buyers only take short-term contracts as they are still unsure what the global economy will be like," said an Indonesian producer.
 "But prices could recover because there's positive sentiment from gains in the oil market," the producer said, adding news of an improving manufacturing sector in China also lent support.
 Prices were up from $62.13 a tonne in the previous day.
 China's gauge of the health of its manufacturing sector, the purchasing managers' index (PMI), gained for the third month in a row in February, suggesting the domestic economy, and oil demand, could be recovering. [ID:nPEK16693]
 Oil hovered below $45 on Thursday, after surging nearly 9 percent overnight on government data showing a surprise drop in U.S. crude stocks, which could signal recovering demand in the world's top energy consumer.[O/R]
 South Korean power plants have awarded thermal coal in several tenders this week.
 Korea East West Power Co (KEWESPO) has awarded 800,000 tonnes of thermal coal to five bidders in recent tender while Korea Midland Power Co (KOMIPO) has awarded 16 coal cargoes or 1 million tonnes of thermal coal to eight bidders, sources said on Monday.
 A 30,000-tonne parcel of coal and a 15,000-tonne parcel, both for delivery in June, were traded at $61 a tonne each.
 Parcels of Indonesian bituminous of 6,700 kcal/kg air-dried basis, was traded at $72 a tonne, FOB barge in Kalimantan.
 Demand from overseas steel and cement makers remained weak but some Japanese buyers from general industry started to look for cheaper coal in Indonesia, the Indonesian producer said.
 "Normally, they buy from China or India but now they are scouting for cheap coal here," he said.
 Indonesian sub-bituminous of 5,700 kcal/kg (ADB) was offered at $62 a tonne, FOB mother vessels in southern Sumatra, for prompt shipment.
 Local power plants still have adequate stocks as suppliers turned to local market amid slowing overseas demand.
 Coal stocks at Suralaya power plant, one of Indonesia's biggest power plants, stood at 1.4 million tonnes or enough for more than a month, the Indonesian producer said.
 Indian buyers were also still active buying Indonesian coal on growing demand, an Indonesian coal trader said.
 "Logistics-wise, Indonesia is still the best market," the trader said.
 India's demand for coal is growing by around 8-9 percent a year, outpacing production that is growing by 6 percent as power sector has not been hit by the credit crunch. [ID:nSP283137]
 MAY '09    N/A          N/A        $59.75
            N/A          N/A       $60.25
 Q2 '09     $61.25       N/A        N/A
            $61.25       N/A        N/A
            $61.25       N/A        N/A
            $61.50       N/A        N/A
 Q3 '09     $61.40       N/A        N/A
            $60.75       N/A        M/A  (Reporting by Fitri Wulandari, editing by Sara Webb)

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