Australia’s Newcastle Coal Price Slumps 12% to 10-Month Low

By Jesse Riseborough

Nov. 24 (Bloomberg) -- Power station coal prices at Australia’s Newcastle port, a benchmark for Asia, slumped 12 percent to a 10-month low after a decline in the price of oil.

The weekly index for thermal coal prices at the New South Wales port fell $11.83 to $85.69 a metric ton in the week ended Nov. 21 to the lowest since Jan. 18, according to the globalCOAL NEWC Index. That’s the biggest weekly slump for at least eight years, according to data compiled by Bloomberg.

Crude oil, down 66 percent from a July 11 record, slumped 13 percent last week as a deepening global financial crisis reduces energy demand. Goldman Sachs JBWere Pty last week cut its forecast for 2009 coal prices to $90 a ton, implying a 28 percent decline from this year’s contract of $125 a ton.

“The thermal market has been closely tracking the oil price as it is an energy market,” Mark Pervan, a senior commodity strategist at Australia and New Zealand Banking Group Ltd. in Melbourne, said today.

Producers that had switched to mining semi-soft coal used by steelmakers to gain from higher prices had returned to supplying power station coal after demand for the metal eased, contributing to the slump in the energy coal market, Pervan said.

The weekly globalCOAL index is down 56 percent from a record of $194.79 for the week ended July 4. The monthly index fell 26 percent to $106.92 a ton in October, from $144.82 the previous month.

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.

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