Asia Coal Stocks Decline on Concerns Prices Will Slide With Oil

By Leony Aurora and Wang Ying

Aug. 5 (Bloomberg) -- China Shenhua Energy Co. and PT Bumi Resources, the biggest coal producers in China and Indonesia, led Asian coal stocks lower on concern prices of the fuel will drop following declines in oil.

Shenhua Energy fell by as much as 7.5 percent, the biggest drop in almost five months. Bumi plunged as much as 10 percent, the largest decline since Jan. 22, while Australia's Gloucester Coal Ltd. dropped 9.3 percent.

The Bloomberg Asia Pacific Coal Index, which tracks prices of 17 coal stocks, fell 5.3 percent after oil dropped 3 percent yesterday. The weekly price index for power-station coal shipped from Australia's Newcastle port, a benchmark for Asia, was down 8.2 percent last week to $160.40 a metric ton, according to the globalCOAL NEWC index.

``Some investors speculate that coal prices may extend a decline on lower global oil prices,'' Nomura Securities Ltd. analyst Donovan Huang said by phone from Shanghai today.

Benchmark crude oil in New York yesterday fell below $120 a barrel for the first time since May. Oil prices are a benchmark for natural gas, which competes with coal in power generation.

Bumi dropped 7.7 percent in Jakarta to 5,400 rupiah at the stock market's midday break, extending yesterday's 4.9 percent decline. The stock, the worst performer among 46 in the MSCI AC Asia Pacific Energy Index, also fell after Citigroup Inc. cut its target price by 14 percent to 8,300 rupiah ``following weak first-half numbers.''

The coal exporter reduced its full-year sales target on Aug. 1 by 1.6 percent to 60 million tons after rainfalls cut first-half deliveries. Citigroup maintained a ``buy'' rating on the shares.

Banpu, China Coal

Banpu Pcl, Thailand's biggest coal miner, declined 6.7 percent to 388 baht while its Indonesian unit PT Indo Tambangraya Megah fell 6.7 percent to 26,550 rupiah. Centennial Coal Co. dropped as much as 8 percent in Australia. China Coal Energy Co. and Yanzhou Coal Mining Co. were down as much as 7.1 percent.

China, the world's biggest coal producer and user, last month capped prices of the fuel to help power generators cope with costs. Prices of coal for immediate delivery at Qinhuangdao, China's biggest coal port, have fallen about 40 yuan a ton after the government ordered the price cap, the National Development and Reform Commission, the country's top economic planner, said in a statement on its Web site last week.

Global energy and raw-materials stocks have declined into bear markets after dropping more than 20 percent from a May record. Plunging oil, gold, copper, wheat prices have spurred sell-offs in last year's best-performing industries.

To contact the reporter on this story: Leony Aurora in Jakarta at laurora@bloomberg.net; Wang Ying in Beijing at wang30@bloomberg.net.