By Jesse Riseborough
Dec. 6 (Bloomberg) -- Power station coal prices at Australia’s Newcastle port, a benchmark for Asia, dropped for a fourth week, declining to the lowest in almost 14 months as demand from utilities weakened.
The weekly index for power-station coal prices at the New South Wales port fell $2.10, or 2.7 percent, to $76.09 a metric ton in the week ended yesterday, according to the globalCOAL NEWC Index. That’s the lowest price since Oct. 19, 2007, and a 61 percent decline from a July record.
Contract prices for the fuel, at a record $125 a ton this year, may drop next year as power demand falls on the global recession, Merrill Lynch & Co. analysts said. Xstrata Plc, the world’s largest shipper of power-station coal and BHP Billiton Ltd. are among companies that ship coal through Newcastle.
Merrill Lynch cut its forecast for 2009 contract prices, for the year starting April 1, by 38 percent to $80 a ton, analysts led by Sydney-based Vicky Binns said in a report dated yesterday. The monthly globalCOAL index fell 15 percent to $91.36 a ton in November, from $106.92 the previous month.
“Adding downward pressure on Newcastle thermal coal prices is that producers selling thermal coal into spot markets may be willing to take a hit on prices so as not to lose port allocations for 2009,” Merrill said. “Previous capacity allocation systems at Newcastle have used historical shipping performance in determining forward capacity allocations.”
To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net
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