29 Oct 2013
* Newcastle coal prices strike 5-mth high on winter restocking
* Chinese prices tick up; import demand returns
Australian thermal coal prices jumped over $2 to hit a near five-month high of about $84 a tonne in the latest week, boosted by supply worries in Europe and renewed import interest from top buyer China.
Australia's Newcastle spot daily index rose $2.88 to $83.86 a tonne on Friday from a week ago, data from online trading platform globalCOAL showed on Monday, the highest since the week of June 7.
"It's tracking the gains in Europe because of heavy restocking. South African coal spiked 10 percent last week so we're seeing Australia chase those gains," said a Singapore-based trader.
European coal prices jumped last week as tightness forced utilities to buy, while rebel attacks on a Colombian coal railway and a rumoured move by a trading house to back up a large physical position also caused South African coal prices to spike.
Coal prices from Colombia, a major supplier to Europe, jumped as a second rebel attack on a coal railway in just 10 days heightened supply worries amid the winter heating season.
Demand from Japan and South Korea has also picked up, traders said. In a sign of improved demand for Australian coal, shipments from its top Newcastle port jumped 12.5 percent to 6.61 million tonnes in the week to Oct. 28.
Renewed import interest from China, helped by the recent drop in freight rates, along with a tick up in local prices, also boosted sentiment, traders said.
Chinese domestic coal prices edged up 2 yuan to 533 yuan ($87.61) per tonne in the latest week, according to the Bohai-Bay Rim Steam Coal index.
The most traded thermal coal futures for January delivery stood at 558.2 yuan a tonne on Monday, down 0.5 percent from week ago.
Although Chinese prices have paused from an 11-month slump,
some market participants remain cautious about its recovery through the fourth quarter.
"Local freight rates have already begun to fall, a sign that utilities are well-stocked and are retreating from the market," said a Beijing-based coal trader.
Ahead of the 2014 term negotiations that will kick off in December, utilities would also prefer to turn to imported coal for their restocking needs in a bid to prevent a rally in domestic prices, trade sources said.
Coal stocks at the five main northern ports, including Qinhuangdao, fell 3.9 percent from week ago to 14.7 million tonnes on Monday, while the total number of ships queuing to load coal at the three northern ports stood at 171, down 3 percent from the previous week