By Jesse Riseborough
Dec. 1 (Bloomberg) -- Power-station coal prices at Australia’s Newcastle port, a benchmark for Asia, slumped 8.7 percent to a 13-month low amid rising stockpiles of the fuel in China and a drop in electricity demand.
The weekly index for thermal coal prices at the New South Wales port fell $7.50 to $78.19 a metric ton in the week ended Nov. 28 to the lowest since Oct. 26, 2007, according to the globalCOAL NEWC Index.
Coal supplies in China, the world’s biggest consumer, rose 19 percent in October while power generation fell 5.3 percent, curbing demand for exports, Macquarie Group Ltd. said today. The price has dropped 60 percent from a July record and has traded below this year’s contract price of $125 a ton for the past nine weeks as demand drops and supplies in China increase.
“The Chinese thermal coal market has moved into oversupply as electricity and coke demand collapse yet coal supply continues to grow,” Macquarie analysts led by London-based Jim Lennon said. “Major production cuts may be imminent, whether voluntary or via government safety shutdowns.”
The monthly index fell 15 percent to $91.36 a ton in November, from $106.92 the previous month. Goldman Sachs JBWere Pty cut its forecast for 2009 coal prices to $90 a ton in a Nov. 17 report, implying a 28 percent decline from this year’s contract.
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
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