Australia's thermal coal
prices, a benchmark for Asia, rose to $99 a tonne on Thursday,
on tight regional supplies and as Asian utilities build stocks
to meet a summer season demand spike by industry and
households.
Prices of power-station coal look set to leap above $100 a
tonne, some analysts said, bolstered by growing demand from
both Europe and Asia as well as supply constraints.
Thermal coal prices on the globalCOAL Newcastle weekly
index gained 59 cents from a week ago to $99.06 a tonne
free-on-board (FOB) Australia's Newcastle port on Thursday.
"Coal could punch through $100 a tonne with signs of
seasonal restocking emerging in Europe and Asia," said Mark
Pervan, a resource analyst at Australia & New Zealand Bank.
"Potential industrial action in South Africa and falling
port stocks in China also flags a tighter supply backdrop."
All eyes are on South Africa this week as some 50,000
workers threatened to go on strike at the Richards Bay port,
rail and pipeline operations should wage talks with logistics
group Transet [TRAN.UL] failed. [ID:nLDE63J293]
A strike could cripple the transport of coal exports and
dramatically tighten seaborne supplies, as other main coal
exporting nations -- Indonesia and Australia -- are already
struggling to increase output due to infrastructure and weather
constraints.
South Africa is a key supplier of coal to India and Europe,
where many power plants have begun experiencing shrinking coal
stocks. Any disruption to supplies would force the buyers,
particularly Indian utilities, to turn to Indonesian supplies.
However, an extended rainy season means many Indonesian
producers in the Kalimantan region are still struggling to keep
pace with existing orders.
"Demand is beginning to pick up from all over but supplies
are slow to increase. So if the Chinese buyers decide to enter
the market in a big way, prices could really rock much higher,"
said a Sydney-based trader.
In a sign that Chinese utilities were also about to begin
restocking activities, producers in Indonesia and Australia
said enquiries from Chinese power plants for supplies in the
second half of the year were starting to flow in again, after
experiencing a quiet month in March.
Asian prices have gained about 18 percent so far this year
and last touched $100 in late January on the back of a Chinese
import frenzy as a cold winter halted domestic production and
drove up prices.
Spot prices in China's top coal port Qinhuangdao rose
slightly on the week to as much as 740 yuan ($108.40) a tonne,
while coal stocks in the country's key power plants fell about
one percent on th week to 42.2 million tonnes, sufficient for
12 days of consumption, data showed.
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