AUSTRALIA COAL: S Korean buying boosts Newcastle high ash market
Perth (Platts)--15Nov2012/603 am EST/1103 GMT
Feverish purchasing by South Korean utilities in recent days has given a
lift to prices for high ash thermal coal at the Newcastle trading hub, market
Platts assessed the price of Newcastle 5,500 kcal/kg NAR thermal coal
with typical ash of 20%, normalized from 17-23%, and for loading in the next
7-45 days at $71/mt FOB and up 40 cents on-day.
The ash differential for Newcastle 5,500 kcal/kg NAR thermal coal inched
up to 58 cents per 1% ash on Thursday.
South Korean buyers are willing to pay more for spot cargoes of
Newcastle high ash coal than Chinese end users and traders whose ranks have
thinned in the spot seaborne market, sources said.
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"Last week and this week, there have not been many Chinese buyers asking
for cargoes from Australia," said a trader in China, and adding that some
larger Chinese trading houses have effectively stopped importing spot cargoes
because end users there are overstocked.
Korea Western Power squared away a tender Thursday for one Capesize of
Newcastle thermal coal for January-February loading at a reported price of
$79/mt FOB on a 6,080 kcal/kg NAR basis, having specified minimum 5,600
kcal/kg NAR and maximum ash of 20% for the cargo.
When adjusted to the specification for Platts high ash Newcastle coal
price assessment of 5,500 kcal/kg NAR and 20% ash, the $79/mt FOB price
converts to approximately $71.50/mt.
Earlier this week, another Korean utility -- East-West Power -- bought
five Capesize cargoes of Australian thermal coal for shipment in January and
February in a joint tender on behalf of all five South Korean utilities.
Market sources said the price in the East-West tender was $80-81/mt FOB
on a 6,080 kcal/kg NAR basis and its tender had specified coal with a minimum
calorific value of 5,700 kcal/kg NAR, and ash to a maximum of 17%.
Adjusted to a specification of 5,500 kcal/kg NAR and 20% ash, the price
in the tender works out to roughly $71/mt FOB Newcastle.
Korea South-East Power has added to the volume of buying activity from
South Korea, by rushing out a lightning tender seeking 1 million mt of
thermal coal for December to June 2013 delivery that includes a solicitation
for 420,000 mt of 5,500 kcal/kg NAR and maximum 20% ash thermal coal.
The South Korean tenders have eaten into spot cargo availability at
Newcastle port, and has had a noticeable impact on bid prices in the market.
Firm bids were heard at $71.25/mt FOB for Newcastle thermal coal with
maximum ash of 23% on a 5,500 kcal/kg NAR basis for December loading through
Marex Spectron, Thursday, and rising from $70.75/mt the previous day.
A string of Capesize high ash cargoes were heard sold directly by an
Australian coal producer to a Chinese counterparty at $73/mt FOB Newcastle in
a deal stretching from January to the end of June 2013.
Sell-side prices were hard to come by in Thursday's Asian trading
session, as coal producers are preferring to keep watching the market, rather
than offer cargoes aggressively.
On a delivered price basis, November and December-loading high ash coal
from Australia was sought by Chinese buyers at $83.75/mt CFR south China, as
heard through Marex Spectron.
Delivered China prices for Newcastle high ash cargoes have stabilized
around $84/mt CFR this week.
Buyers again focused on lifting February-loading parcels of Newcastle
6,000 kcal/kg NAR thermal coal on Thursday, with two trades for a total of
50,000 mt going through globalCOAL at slightly higher levels than the
The February parcels traded on screen at $87.75/mt FOB and $88/mt
Thursday, following two trades for the same month earlier in the week at
$87.35/mt and $87.50/mt, respectively.
After these deals, Newcastle standard grade coal was bid at $82/mt FOB
for loading in December, bid at $85.50/mt for January without any
corresponding offers, while February and March parcels were offered at
$88.25/mt and $91/mt, on the trading platform.
--Mike Cooper, firstname.lastname@example.org
--Edited by Jonathan Dart, email@example.com