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Newcastle 5500 coal versus FOB Newcastle 6300: May 7 - August 8, 2012

By Mike Cooper in Perth

Newcastle 5500 coal versus FOB Newcastle 6300: May 7 - August 7, 2012

Newcastle 5500 market commentary

Spot prices for Newcastle higher ash thermal coal held steady at $71/mt FOB as news emerged August 8, that two Capesize cargoes of Australian higher ash thermal coal had been sold to a Chinese trader in the past week for a FOB price of $68/mt.

The two cargoes were Queensland 23% ash thermal coal with an August loading date at Gladstone port, and were for onward shipment to Guangzhou port in southern China, according to a China-based market source.

The Queensland 5,500 kcal/kg net as-received cargoes were booked by a regular customer of Australian thermal coal for a price of $68/mt FOB, said the market source.

Commentary continue below...

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The cargo was destined to a customer in China, according to a market source with knowledge of the transaction.

Chinese traders have been adept at driving hard bargains for higher ash Australian coal.

This is in spite of Australian coal producers not wanting to let go of 5,500 kcal/kg NAR cargoes with maximum 23% ash for prices of less than $70/mt FOB Newcastle.

"Chinese expectations for lower quality 5,500 kcal/kg NAR thermal coal are quite low. Prices haven't picked up yet," said a trader.

Newcastle 6300 market commentary

The knock-on effect of a Colombian railway strike and increased buying interest from South Korean purchasers were together put forward by market participants as reasons for a rally in premium-grade Newcastle thermal coal prices.

A parcel of Newcastle 6,000 kcal/kg NAR fuel for loading in November traded on screen Wednesday at $93.75/mt FOB, which was $1 higher than a trade on globalCOAL on August 7 for the same amount of tonnage and delivery period at $92.75/mt FOB.

"The recent rally has purely been driven by the Colombian rail strike which has sent European prices higher, and Newcastle has been dragged up with it," said one participant in the Asia-Pacific coal market.

"I suspect Newcastle prices won't stay here for long and will retreat again," he stated.

The market participant rejected speculation that reduced cargo availability was behind the jump in Newcastle premium coal prices.

Additional coal price charts:

FOB Richards Bay coal prices

CIF ARA coal prices

FOB Kalimantan 5,900 kcal/kg coal prices

FOB Kalimantan 5,000 kcal/kg

CFR EC / WC India 6300 kcal coal prices

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