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Australian Newcastle spot thermal coal prices hit $120 for the first time since 2012 this week.  Asian countries continuing strong consumption and spot market buying by Japanese utilities to meet demand through the rest of 2018 are pushing prices higher.

Coal Ships NewcastleThermal coal cargoes for prompt export from Australia’s Newcastle port last settled at $120.10 per tonne.

  • The highest close since November 2012
  • Up 140 percent from record contract lows in late 2015 and early 2016. 

Following on from last month strong demand from China fueled by heat waves across North Asia and China buying ahead of the peak summer demand season. The demand comes despite the Chinese governments push to move industry and millions of households from coal use to cleaner natural gas.

The move in prices has been swelling Australia's coffers with the Australian Chief Economist’s outlook for global commodity prices, demand and supply projecting coal to overtake Iron ore as Australia’s largest export earner this coming year.

Indonesia has also seen huge benefit from China’s strong demand.

Ship brokerage Banchero Costa note to clients:

  • “Indonesian shipments to China saw the most gains, estimated to reach 61.8 million tonnes or approximately 49 percent of Chinese imports in the first 6 months of 2018, up from 46.3 million during the same period in 2017,” 
  • “Imports from Australia were estimated at 42.84 million tonnes or 34 percent of China’s imports in 1H 2018, marginally higher compared to the 42.62 million tonnes shipped during the same period in 2017,”

Japanese utilities buy nearly 40 percent of Australia’s thermal coal exports have also been supporting the demand picture also. In the past Japanese utilities have long-term deals in place for coal. With the dramatic proce rise of 140% deals have not been struck as in the past.

Reuters reports that talks between Japanese utility Tohoku Electric Power and Glencore, the world’s biggest supplier of seaborne thermal coal, were recently abandoned after they failed to reach an agreement. Traders said this forced Tohoku into the spot market to cover anticipated demand for the rest of the year.

“Once it became clear there would be no agreement, Tohoku went into the spot market to order supplies from Australia,” said one trader with a major merchant, who declined to be named as he was not authorised to speak to media about commercial matters. “Other utilities, which in the past have used the Tohoku/Glencore deal as a price benchmark, also rushed into the spot market to order coal,” he added.

Tohoku was not immediately available for comment reported Reuters.

Source: Reuters 

From A Sunburnt Country ....

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