Bloomberg News

Indonesian Thermal Coal Swaps Advance; China Contracts Fall

February 05, 2013

Swaps prices gained for thermal coal loading from Indonesia, the world’s largest exporter of the fuel, according to Ginga Petroleum Singapore Pte.

The contract for Indonesian sub-bituminous coal with a calorific value of 4,900 kilocalories a kilogram in the second quarter rose 15 cents to $66.30 a metric ton on a net-as- received yesterday, Ginga said in an e-mail today. The March contract held at $65 a ton.

Contracts for coal with a heating value of 5,500 kilocalories a kilogram for shipment to South China in the second quarter fell 10 cents to $87 a ton, the energy broker said. The swap for March added 10 cents to $85.85 a ton.

China will continue to import Indonesia’s low calorific value coal while India will marginally increases purchases of the fuel, Prama Chusnun, an analyst at BNP Paribas, wrote in a note today. Exports to Japan, Korea and Taiwan will be stable and domestic demand may grow with new power plants, according to the report.

A commodity swap is a financial agreement whereby a floating price is exchanged for a fixed rate over a specified contract period. About 60 percent of Indonesia’s coal is classified as sub-bituminous. Higher moisture levels and a lower carbon content reduce the heating value compared with better- quality stock. Sub-bit coal has fewer than 6,100 kilocalories per kilogram, according to the Indonesian energy ministry.

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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