Asia Coal prices fall further as poor demandbites

   Date:2011/12/01     Source:

Reuters reported that Australia thermal coal prices a benchmark for Asia slipped toward USD 113 per tonne this week as poor economic data from China and weak demand weighed on sentiment with buyers and sellers both expecting prices to fall further despite colder weather setting in.

A second weekly decline in Chinese spot coal prices also underscored deteriorating demand in the world's largest coal consumer a bearish signal that would likely encourage sellers to cut prices. Speculation that the government could intervene to cap spot coal prices at CNY 800 per tonne also cast a pall on the market.

Thermal coal on the global COAL Newcastle index for the week to date closed at USD 113.21 per tonne on Thursday down from USD 113.50 a week earlier. China benchmark steam coal prices with a heating value of 5,500 kilocalories per kilogram slipped 0.23% to CNY 852 on the Bohai Bay index which covers spot prices at six major coal shipping ports in northern China.

Several Chinese importers said they had already booked enough imports for until early January and expectations that international prices would fall further encouraged them to bide their time.

A Shanghai-based buyer said "Prices have been falling week after week and offers are now coming lower. I don't think there a lot of upside for prices, so we can afford to wait."

Offers for Australian coal into China were coming in at around USD 110 per tonne CFR, but a second buyer said he was eyeing closer to USD 107 per tonne. However a seller said deals were still being done and some Chinese traders had been taking the opportunity to snap up cheap Indonesian cargoes at depressed price levels.

He said "China will have to burn coal and they will import if overseas prices are cheaper. But in this gloomy economic outlook, sellers just have to be prepared to cut prices."

Speculation that Beijing could intervene to cap spot coal prices at CNY 800 per tonne by as early as December also weighed on sentiment. However, two big importers shrugged off the talk as rumours, with one state-linked trader saying such a move was unlikely and there had been no consultation between the National Development and Reform Commission and major producers.

A Shanxi-based trader said "Contract prices will likely rise but there's no reason to cap spot prices especially when the market is trending downwards."

Elsewhere in Asia, trade sources said Australian supplies were still plentiful while demand from Japan had been kept at the minimum.


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