Australia's Newcastle Energy Coal Price Declines 9.5%

By Jesse Riseborough

Sept. 22 (Bloomberg) -- Power-station coal prices at Australia's Newcastle port, a benchmark for Asia, dropped 9.5 percent last week to the lowest in four months after crude oil declined and demand slowed in China.

The weekly index for power-station coal prices at the New South Wales port fell $14.35 to $137.30 a metric ton in the period ended Sept. 19, according to the globalCOAL NEWC Index. Exports from the port jumped 38 percent to 2.02 million tons in the week ended 7 a.m. local time today, Newcastle Port Corp. said on its Web site.

Coal prices should fall after crude oil dropped to its lowest in seven months last week, Mark Pervan, a commodity strategist at Australia and New Zealand Banking Corp. in Melbourne, said in a Sept. 17 report. Rising coal stocks at ports in China, the world's largest consumer of the fuel, may cut export demand, Pervan said.

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. Thermal coal producers won a 125 percent increase in annual contract prices in the year that started April 1 to $125 a ton.

The index has slumped 30 percent since reaching a record $194.79 for the week ended July 4. The monthly index fell 13 percent to $160.90 a ton in August from $184.51 a month earlier.

Waiting Ships

Benchmark New York oil prices have dropped almost 30 percent from the record $147.27 a barrel reached July 11, and slumped as low as $90.51 on Sept. 16.

A total of 29 ships, waiting to load 2.6 million tons of coal, were lined up outside the port, up from 27 last week, Newcastle Port said. Coal ships waited 8.89 days to load coal in the week ended today, up from 7.25 days a week earlier, it said. The waiting time compared with 0.32 day for general cargo vessels last week, it said.

A total of 18 vessels carrying coal left Newcastle in the week ended Sept. 20, Newcastle Port said today in an e-mailed report. Ten ships were bound for Japan, three for Taiwan and South Korea, and one each for France and the northern Australian port of Gladstone, it said.

Australia's output of thermal coal may increase 4.2 percent in 2009 to 192.4 million tons, the Canberra-based Australian Bureau of Agricultural and Resource Economics said today in an e-mailed statement.

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