| PERTH, June 2
PERTH, June 2 Asia's thermal coal markets were
focused on Chinese demand as the world's largest coal consumer
faces what is expected to be the worst power shortage in years.
Chinese buyers have been in the market for both Indonesian
and Australian coal as domestic prices in the world's largest
coal producing country have shot up.
But Australia's thermal coal prices, a benchmark for Asia,
were still slightly lower on the week with the globalCOAL
Newcastle index closing at $118.86 on Wednesday, a dollar down
from a week ago.
China's daily prices for coal with a heating value of 5,500
kcal/kg NAR were 845 yuan ($130.43) per tonne on Thursday,
according to industry data website SXCOAL (www.sxcoal.com).
"Because everybody else has secured their requirements right
now, everybody is focused on what incremental prices China is
willing to pay for lower-calorific Indonesian and the tailings
and washings out of Australia," one Singapore-based source said,
referring to Newcastle coal which does not meet the standard
China said on Wednesday that it would encourage imports,
which typically only enter the country when China's domestic
coal prices are high enough to make economic sense.
Chinese demand for Indonesian coal, however, was seen
slightly lower during the past week.
"They have bought quite enough low-grade coal from
Indonesia- now they are trying to find some higher-grade coal to
blend. Australia is the most economical source," another
Singapore-based market source said.
Most recently, Chinese buyers secured a cargo of 4,900
kcal/kg Indonesian coal for $89 per tonne FOB, a couple of
dollars cheaper than deals done late last week, the source said.
Japan's coal demand outlook will also be in focus, with
Xstrata , the world's largest exporter of thermal coal,
visiting Japan next week to negotiate an annual supply contract
beginning July 1.
Although the supply contract beginning in July is for far
less tonnage than the April contract, which serves as a yearly
price benchmark, the negotiations may provide an indication for
how well utilities are recovering from the March 11 earthquake.
Major utilities Tokyo Electric Power and Tohoku
Electric were forced to declare force majeure on some
coal shipments after some power plants were knocked offline due
to the earthquake and tsunami.
A Sydney-based trader said the settlement price for the July
contract may be similar to April's price of $129.85 per tonne,
but others disagreed, saying lower demand due to the Japanese
earthquake would depress prices.
"I wouldn't be surprised if they settle at $125 per tonne,"
one trade source said.
($1 = 6.479 Chinese Renminbis)
ADDITIONAL REUTERS COAL COVERAGE:
Reuters coal data guide..............
All coal news........................
Power and gas news...................
RECURRING MARKET/DATA REPORTS
Australian spot prices..............
Australia Newcastle stocks..........
China monthly coal import/export....
Coal Freight prices.................
TRADES AND TENDERS
McCloskeys weekly physical spot/freight prices..<0#MCC-CASH>
API4 coal paper prices, McCloskeys............<0#MCC-C-API4>
API2 coal paper prices, McCloskeys............<0#MCC-C-API2>
Indonesian Govt Coal Benchmark...................<0#COAL-ID>
(Editing by Himani Sarkar)