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Asian coal prices lifted by tightening markets in China, India

Asian physical coal prices edged up this week, at least temporarily halting a month-long steady fall of Australian prices as China raised its prices due to tightening supplies, while South African markets were supported by strong Indian demand.

Chinese state coal firms have raised prices for the second time in a month due to high summer demand after a long sequence of cuts.

The China Coal Transport and Distribution Association (CCTD) said that Shenhua, China Coal Energy and Inner Mongolia Yitai Coal had raised the June price for most grades of coal by 5-15 yuan ($0.8-$2.42) per tonne.

The firms raised prices of lower-grade coal by 10 yuan per tonne in mid-May, anticipating a surge in demand for power over the summer.

Traders said the push helped lift prices for Australian cargoes, which are mostly sold to China, with prompt cargoes from its Newcastle terminal last settling at $59.35 a tonne, up from $58 at the beginning of June.

Newcastle prices had previously fallen 20 percent since April when a storm forced a port closure.

But analysts said that China’s tightening market was temporary.

“Coal consumption is falling as authorities attempt to address the country’s air pollution crisis … In the first four months of the year, China’s imports of thermal coal fell by almost 41 percent year on year to total 54.4 million tonnes,” National Australia bank said.

“Reflecting the softer thermal coal demand conditions and excess capacity for supply, we expect … the 2016 Japanese financial year contract price … at $62 a tonne (from US$67.80 this year),” it added.

South Africa, which exports mostly to India, saw prices for its Richards Bay cargoes edge up half a dollar since the beginning of the month to $64 a tonne as Indian power stations increased orders ahead of the June-September monsoon season, when power demand peaks and domestic coal production drops due to flooded mines.

South African cargoes have seen a period of volatility as power black-outs threatened coal mining and ship loading capacity.

South African coal prices traded on the globalCOAL platform have come under scrutiny after complaints about high bids for unusual tonnage deliveries.

GlobalCOAL’s meets on Wednesday to review if it should limit volumes to multiples of 25,000 tonnes on the physical market.

In the Atlantic basin, European prices rose 60 cents this week to $57.85 a tonne, ending a 5 percent fall in May.

In Colombia, authorities extended a restriction on overnight use of its main coal railway, and partially suspended construction on a track.
Source: Reuters