March 11, 2013 / 6:37 AM / 5 years ago

Asia Coal-Prices fall below $92 as buyers retreat

SHANGHAI, March 11 (Reuters) - Australian thermal coal benchmark prices fell for the fourth straight week to below $92 per tonne as demand from top buyer China was soft and as regional buyers retreated as they expected prices to fall more during the seasonal demand lull.

A rise in international freight rates, along with falling domestic prices in China, where stockpiles at major utilities are hovering at levels equivalent to nearly 30 days of consumption, also weighed on prices, traders said.

Australia’s Newcastle spot index fell 1.6 percent from a week ago to $91.96 per tonne on Friday -- the lowest since late November, data from online trading platform globalCOAL showed.

“There are very few transactions. Buyers are staying away from the market because they expect prices to head further south,” said a Singapore-based trader.

Climbing freight rates, which saw the Baltic Exchange’s main sea freight index rise 8.6 percent last week, also pressured free-on-board prices from Australia, traders said.

Freight rates for panamax-sized vessels from Australia’s Newcastle port to Guangzhou’s Huangpu terminal have risen about $0.50 from a week ago to between $15-$17.00 a tonne.

Ongoing term contract negotiations between Australian coal producers and Japanese power utilities, which sets a price benchmark for North Asian buyers, has also led utilities to stay on the sidelines, traders said.

In China, falling domestic prices also weighed on sentiment.

The price of steam coal with a heating value of 5,500 kcal/kg (NAR) fell 5 yuan from week ago to between 615-625 yuan ($100) a tonne on Sunday, data from top coal port Qinhuangdao showed. Port stocks rose 25,200 tonnes to 7.45 million tonnes on Sunday.

Chinese demand in the seaborne market has remained quiet since the Lunar New Year holiday ended, traders said, with rates for 5,500 kcal/kg Australian coal with April to May delivery quoted at around $87 a tonne on a cost and freight basis.

That compares to bids of around $86 a tonne by Chinese buyers.

“Stocks are high and utilities have already imported so much in the past few months. I don’t think there’s any appetite to build stocks now unless the prices are very attractive,” said a Beijing-based trader.

Combined coal stocks held by six major power generation companies in eastern and southern China rose 0.6 percent to 17.6 million tonnes early last week, Qinhuangdao Port said in a weekly report on Thursday.

The stocks held by Zhejiang Power, Shanghai Power, Guangdong Power, Guodian, Datang and Huaneng will be able to last for 29.4 days of consumption, down 4.5 days week-on-week, the report said.

$1 = 6.2147 Chinese yuan Editing by Muralikumar Anantharaman

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