TRACK GAINS IN CRUDE OIL; STEADY DEMAND FROM CHINA
Prices of power-station coal in Australia, a benchmark for Asia, rose to a three-month high of $66 a tonne this week, tracking a rally in oil markets while steady Chinese demand also offered underlying support. Thermal coal prices on the global COAL Newcastle weekly index rose $2.62 from the previous week to $66 a tonne, the highest since February 27.
9.5% GAIN FOR CRUDE OIL
"Coal prices are largely tracking the gains we saw in crude oil markets last week. Fundamentally, prompt coal demand from China is also quite strong," said an Australia-based coal trader. US crude oil futures gained 9.5 per cent last week to hover near a six-month high of bove $61 a barrel, on supply disruptions and refinery problems in the US.
"Enquiries from China are still coming in and that's also helping to hold up Asian prices," he said. China's appetite for overseas coal has helped to offset slumping demand from Japan, the world's No. 1 coal importer, and propped up Asian coal prices since the start of the year.
IMPORTS SOAR
Government data showed Chinese coal imports soared to a record high of 9.16 million tonnes (mt) in April, up 3.4 mt from a month earlier and far exceeding market expectations.
OPTIMISM
Some producer sources said they remain optimistic that China's demand for overseas coal would stay robust in the next few months, supported by a gradual recovery of its economy, a seasonal rise in coal consumption and high domestic coal prices.
DRAGGING TALKS
"Price negotiations with local suppliers are dragging on and considering the wide gap between domestic and overseas coal prices, it's hard to see local miners like Shenhua agreeing to such a steep price cut," said an Australian producer source. Coal prices at China's top coal port Qinhuangdao ticked up last week to hover around $93 a tonne, based on coal with a calorific value of 5,800 kcal/kg (NAR), as restricted production as small mines limited supplies.
