SHANGHAI: Australia's thermal coal prices rose by more than $2 per tonne from last week to tip past $121 per tonne, defying downward pressure in the broader energy complex, as heavy rains at coalfields in the Hunter Valley region slowed output.
Thermal coal on the globalCOAL Newcastle index for the week to date was $121.26 per tonne on Thursday, up from $118.93 a week earlier, as price negotiations between Australian suppliers and their Japanese customers continue.
The rise in Australian prices, a benchmark for Asia, came despite coal prices falling by more than $3 per tonne on South Africa's Richard's Bay index as well as crashing oil prices.
"The deluge has slowed operations at some mines and with the Chinese having booked quite a bit of prompt cargoes earlier, any spot supplies in the market now would be hard to find," said an Australia-based trader.
Citigroup analysts said thermal coal prices may gain in the third quarter after wet weather in Australia's Hunter Valley crimped production amid signs demand is reviving in Asia.
A 50,000-tonne shipment for Australian coal for July delivery was traded at $122.50 per tonne on Wednesday.
However, some sellers said Australian prices may struggle to maintain the upward momentum as most Chinese buyers were already beginning to retreat from the market.
"China's summer import appetite is also fading, because of timing and because stockpiles are at a multi-month high," said the trader.
Weak spot demand for coal across Asia has left some traders with cargoes they are struggling to sell, and prompted at least one major player to consider using cape-size ships as floating coal storage.
China's benchmark thermal coal prices averaged 843 yuan ($130.34) per tonne between June 15 and 21, up 0.2 percent from a week earlier, according to the government-backed Bohai-Rim thermal coal price index on Wednesday, while inventories at Qinhuangdao climbed to a three-month high of 7.1 million tonnes.
Data from China on Monday also showed coal imports jumped to 13.6 million tonnes in May, up 24.7 percent from a year earlier and 22.5 percent higher than the month before.
Copyright Reuters, 2011
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