Australian coal prices plummet as Colombian cargoes head to Asia

* Newcastle coal for June delivery hits 10-year lows

* Prices tumble as Asia takes Colombian cargoes

* Low freight, Colombian coal rates mitigate long distance

SINGAPORE/SEOUL, April 29 (Reuters) - Australian thermal coal prices for delivery in June have dropped to 10-year lows as Colombian miners start sending large volumes into Asia for the first time, adding cargoes to an already oversupplied market.

Prices for coal cargoes delivered from Australia’s Newcastle port by May 31 last closed at $46.60 per tonne, their lowest since 2006.

The slump comes just as other commodities such as steel and oil enjoy rallies on the back of new investor appetite.

In thermal coal markets, by contrast, an unusual new trade route has opened as low dry-bulk rates allow Colombian miners, who usually supply North America and Europe, to target Asia.

South Korea’s East-West Power utility (EWP) this month bought 260,000 tonnes of Colombian coal on free-on-board (FOB) terms for loading between June and August, adding to another 410,000 tonnes already on order.

“We have currently got ordered 670,000 tonnes of coal from Colombia,” said a utility source familiar with the matter.

“Currently Colombian coal is about $7-8 (per tonne) cheaper than the Australian coal and if this price trend continues, we are definitely willing to import more from Colombia,” said the source, who declined to be identified.

Colombian coal appearing in larger volumes in the Pacific has helped push down Australian prices, analysts said.

“Coal supply in the Pacific has been rising for more than a month. Shipments from Colombia contributed to this,” said Georgi Slavov, head of energy, ferrous metals and shipping research at brokerage Marex Spectron.

Although he added that these shipments were part of a bigger increase in supplies, including from Australia itself.

Pricing agency Platts reported that the 410,000 tonnes were ordered on a cost and freight (CFR) basis, while the 260,000 tonnes came on a free on board (FOB) basis.

Platts said EWP paid $41 a tonne for the FOB cargoes and $52 per tonne for the CFR supplies, making them competitive against the Newcastle price of $46.60 a tonne, which are quoted on a FOB basis.

That’s still far less than its monthly imports of around 5 million tonnes from Australia and 2-3 million tonnes from Indonesia.

But it’s a huge jump from Colombia’s typical monthly supplies to South Korea of just 1,000 to 3,000 tonnes, and would bring its share of supplies there towards 7 percent.

Colombian miners are having to look to new markets as consumption in Europe and North America is stalling due to the rise of renewables, improving energy efficiency, and because of the U.S. shale boom which has made natural gas highly competitive there.

The extension of the Panama Canal, almost completed, will further boost Colombian coal exports to Asia.

“It will lower the freight costs and make the Colombian coal more attractive to us and other countries in Asia,” the Korean utility source said.

Reporting by Henning Gloystein; Editing by Joseph Radford