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Asian coal prices hit late 2016 high amid huge shipping congestion

Coal News - Published on Mon, 08 Jan 2018

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Reuters reported that Asian benchmark thermal coal prices have pushed to their highest levels since 2016, fuelled by demand in China and loading delays in Indonesia that have ramped up shipping congestion outside major coal ports. Spot cargo prices for Australian Newcastle coal have risen nearly 15% from lows in late November after China loosened import restrictions to help meet a winter fuel shortage.

Mr Zhang Xiaojin, coal analyst at Everbright Futures said that “The reason behind relaxing the restrictions was to ensure coal supplies at utilities, as some coal-fired power plants in eastern regions have been operating with minimum coal inventories.”

The move by the National Energy Administration also followed an ambitious gasification program that moved too many households and factories from coal to gas for its utilities to keep up.

Traders said strong orders from India have also supported prices, which hit USD 105.65 per ton on Wednesday, the highest since November 2016.

A coal trader with a major trading house, who declined to be named said that “India is buying throughout Q1, which means the shortage is not expected to end any time soon.”

Bottlenecks at import terminals across China and delays at loading ports in Indonesia’s Kalimantan island, one of the world’s biggest thermal coal mining regions have added to the tighter market.

A second coal trader said that “The trouble to load in Kalimantan is a result of huge rainfalls. This has triggered replacement orders for supplies from Newcastle, pushing up prices there,” speaking on condition of anonymity as he was not allowed to comment on trading activity.

Shipping data in Thomson Reuters Eikon shows around 100 large dry-bulk ships waiting to load coal off the coast of Kalimantan, Indonesia, most of them at Samarinda and Taboneo.

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Posted By : Nanda Koijam on Mon, 08 Jan 2018
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