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Tuesday, 06 October 09
ASIA COAL-PRICE REBOUND TOWARDS $71 ON TENDER ACTIVITY


Reuters reported that, Prices of power-station coal in Australia, a benchmark for Asia, rose 4 percent in the latest week to near $71 a tonne, bolstered by renewed demand as several South Korean utilities launched tenders to seek more supplies.

Expectations of increased demand over the coming winter months also helped to lift prices, which were trading near a 3-½ month low.

Thermal coal prices on the globalCOAL Newcastle weekly index, a benchmark for Asia, rose $2.68 from a week ago to $70.75 a tonne on Tuesday, based on FOB prices at Australia's Newcastle port.

"Some of the utilities in Korea and Taiwan are hoping to pick the market bottom and have taken advantage of the recent low prices to launch spot and term tenders. That has breathed some life into the market," said an Australian coal producer.

While most of the tenders launched by the South Korean utilities are term tenders for delivery starting from 2010, they are also still seeking about 3 million tonnes of coal for delivery starting from November 2009.

"Generally, the view is that supplies could be quite tight in the fourth quarter since there's limited uncontracted tonnage out of Australia," said the producer.

After an increase in enquiries in late September, traders said China's interest in Australian thermal coal has faded following the recent increase in freight rates and coal prices.

However China's demand for Indonesian coal imports remain firm.

"Indonesia is still China's favourite overseas supplier. Demand from China is still very healthy and that is continuing to help absorb the excess supplies in the market," said a Singapore-based trader.

After having posted its sharpest increase in the year in late September, steam coal prices have remained in an uptrend at China's Qinhuangdao port, the country's largest coal trans-shipment port.

Steam coal prices in China rose for the third straight week, with top grade coal with a heating value of 5,800 kcal/kg (NAR) hovering at between 603 and 635 yuan per tonne.

The increase in Chinese domestic coal prices, which is largely due to the shutdown of small and unsafe mines, has encouraged more Chinese traders and utilities in the south to seek supplies from overseas.

In South Africa, thermal coal prices have also increased for the second week to $62.75 a tonne on the back of Indian buying, while improving demand from Europe is also expected to buoy prices in the coming months.

After briefly touching $80 in July, thermal coal prices in Asia have since fallen to languish at around $66-$68 a tonne over September, as unexpectedly strong production from Indonesia met seasonally low demand.
Source: Reuters



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