By Henning Gloystein and Joseph Radford
September 13, 2017 - Australian coal cargo prices for export from its Newcastle terminal hit a 2017-high of $103.5 per tonne at their last close, driven by strong Asian demand.
The Newcastle free-on-board (FOB) contract is seen as a benchmark for Asian thermal coal prices.
In particular, robust demand is coming from China, the world’s top consumer, where August imports rose to 25.27 million tonnes, their highest since December last year, reflecting increasing appetite from power companies as they build stocks ahead of winter.
“The market was ... buoyed by the China customs data, which saw imports in August rise,” ANZ bank said in a note to clients.
Demand from Japan is also strong, traders said.
“Coal demand from northern Asia is generally pretty strong at the moment. There have also been some loading delays in Indonesia recently, so that’s further spurred demand for replacement cargoes from Australia,” said one coal shipper. He declined to be identified as he was not authorised to speak with media.
Asian demand for coal from Australia is depriving domestic power generators of fuel and driving electricity prices higher.
The strong physical market in Asia also showed in financial trading, where benchmark API2 year-ahead coal futures this week hit their highest level since May 2014, at $81.45 a tonne.
The strong demand for coal from Newcastle is good news for mining and trading giant Glencore, which is the biggest supplier to that terminal.
The Swiss-based, London-listed company exported 52.5 million tonnes of thermal coal from Australia in 2016, virtually all out of Newcastle, making up a quarter of all of Australia’s overseas shipments and the biggest Australian supplier.
Glencore’s share prices have risen by more than a third since the start of the most recent coal price rally.