Bloomberg News

Indonesia Coal Swap Falls; Newcastle at 18-Month Low

May 02, 2012

(Corrects first paragraph of story that ran May 2 to show Indonesia is biggest exporter.)

Swaps contracts for lower-quality coal from Indonesia, the world’s biggest exporter of the power- station fuel, dropped 0.9 percent, according to Ginga Petroleum Singapore Pte Ltd., an energy broker. Newcastle cargo prices slid to the lowest in 18 months.

The June 2012 contract for Indonesian sub-bituminous coal with a heating value of 4,900 kilocalories per kilogram net as received basis declined 70 cents to $75.50 a metric ton, according to data from Ginga. The swap for the third quarter of 2012 was 75 cents lower at $75.25 a ton.

A commodity swap is a financial agreement whereby a floating, or spot, price is exchanged for a fixed rate over a specified contract period.

Coal with a heating value of 5,500 kilocalories per kilogram net as received basis delivered to South China for June fell 85 cents to $101.40 a ton, Ginga said. The swap for the third quarter of 2012 was 50 cents lower at $101.50 a ton.

The price of thermal coal shipments at the Australian port of Newcastle, the physical benchmark contract for Asia, dropped below $100 a ton to the lowest since October 2010 because of weakening demand from China and rising supply of the fuel from countries including Colombia and the U.S.

Newcastle coal 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.

Sub-bituminous coal has a higher moisture level and lower carbon content that reduces the heating value compared with grades with a higher value such as the 6,700 kilocalories-per- kilogram Newcastle grade.

To contact the reporter on this story: Fitri Wulandari in Jakarta at fwulandari@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net


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