Newcastle Coal Little Changed, Exports Increase 4.4%

By Jesse Riseborough

Aug. 25 (Bloomberg) -- Power-station coal prices at Australia's Newcastle port, a benchmark for Asia, were little changed and may rise after China imposed a tax on exports of the fuel last week.

The weekly index of thermal coal prices at the New South Wales port fell $1.75 to $162.15 a metric ton in the week ended Aug. 22, according to the globalCOAL NEWC Index. The index has declined 17 percent from a record $194.79 a ton in the week ended July 4.

Prices may rebound because the market is ``extremely tight'' after China introduced a 10 percent export tax, Macquarie Group Ltd. said in a report today. Supply constraints and rising demand from power stations in China, the world's biggest consumer of the fuel, may boost contract prices by 44 percent next year, it said.

``Chinese coal-fired power plants, and some globally, are facing severe coal shortages and have had to operate below capacity,'' Macquarie analysts led by Jim Lennon said. ``The Chinese market should remain tight in 2009 due to underinvestment in rail transport to deliver coal to power stations.''

Xstrata Plc, the world's largest exporter of power-station coal, BHP Billiton Ltd. and Rio Tinto Group are among mining companies that ship coal through Newcastle.

Exports Rise

Exports from the port rose 4.4 percent to 1.51 million tons in the week ended 7 a.m. local time today, Newcastle Port Corp. said on its Web site. A total of 27 vessels, waiting to load 2.5 million tons of coal, were lined up outside the port, Newcastle Port said.

Coal ships waited 10.95 days to load coal, up from 9.8 days a week earlier, it said. The waiting time compared with 1.3 days for general cargo vessels.

Contract prices for the fuel may rise to $180 a ton in the year starting April 1, 2009, from $125 a ton in the current contract year, Macquarie said.

China has asked coal producers to boost deliveries to power stations to help ease a sixth year of electricity shortages, Vice Premier Li Keqiang said July 31. The country will take additional steps to boost output to help ease its electricity crisis, Zhang Guobao, head of the National Energy Administration, China's top energy regulator, said Aug. 18.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net