Newcastle thermal coal prices fell below $100 a metric ton to the lowest level since October 2010 as demand from China weakened and supply to Asia from countries including South Africa and the U.S. increased.
The price for the power-station fuel at the Australian port of Newcastle, the benchmark contract for Asia, dropped $1.60, or 1.6 percent, to $99.95 a metric ton in the week ended April 27, according to IHS McCloskey, a Petersfield, U.K.-based provider of data. It declined for a third week.
China’s imports of thermal and steelmaking coal declined 15 percent in the first three months of this year from the fourth quarter in 2011, Bloomberg calculations based on customs data showed. Shipments from South Africa from January to March more than quadrupled from the same period a year earlier to 3.8 million tons, customs data showed.
“It’s an absence of Chinese demand,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. (ANZ) in Melbourne, said by telephone today. “The perception is that the Chinese are still well-stocked. You’re probably also seeing a lot more South African coal moving into India and China.”
Chinese prices are more expensive than international varieties. The difference in southern China for thermal coal delivered from the northern port of Qinhuangdao compared with shipments from Newcastle expanded in March to as much as $8.30 a ton, the widest since August 2010, according to data from CLSA Ltd.
“Newcastle coal prices are very much hinged on Chinese coal prices,” Pervan said. “Chinese prices haven’t fallen too far so the arbitrage is still fairly positive for imports, suggesting that they must be well-supplied.”
Tohoku Electric Power Co. Inc agreed to pay Xstrata Plc (XTA) about $115 a ton for supplies from April 2012 to March 2013, Platts reported March 30. Japanese power companies paid a record $129.85 a ton last year in annual contracts with Xstrata, the world’s biggest exporter of the fuel, after rain in Australia, Indonesia and Colombia cut output.
Japan is the second-largest importer of the power-station fuel behind China. Shipments of coal from the U.S. to China rose 14.8 percent in March from a year earlier to 524,723 tons, according to customs data.
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