Indonesian Lower-Quality Coal Swaps Gain, China Prices Unchanged

Swap contracts rose for lower-quality thermal coal loading in the fourth quarter from Indonesia, the world’s biggest exporter of the fuel, according to Ginga Petroleum Singapore Pte.      

The contract for sub-bituminous coal with a calorific value of 4,900 kilocalories a kilogram for loading from Indonesia in the fourth quarter climbed 20 cents to $63.95 a metric ton on a net-as-received basis yesterday, the energy broker said in an e-mail today. The swap for delivery in September fell 35 cents to $61.15 on a net-as-received basis.      

The swap for coal with a heating value of 5,500 kilocalories a kilogram for shipment to South China in the fourth quarter was unchanged at $82.75 a ton on a net-as- received basis, Ginga said. The September contract remained at $81.35 on a net-as-received basis.      

China’s imports of power-station coal may slow amid higher- than-average stockpiles at utilities, increased hydroelectric production and stagnating electricity demand, according to Standard Chartered Plc.      

China’s demand for thermal coal is weaker than last year, Serene Lim, an analyst at Standard Chartered in Singapore, said in a note yesterday. Inventories at major utilities were equivalent to 26 days of consumption as of July 10, compared with the typical 18 days during the summer peak-consumption period, she said.  

A commodity swap is a financial agreement whereby a floating price is exchanged for a fixed rate over a specified contract period.     

About 60 percent of Indonesia’s coal is classified as sub-bituminous. Higher moisture levels and a lower carbon content reduce the heating value compared with grades with a better quality stock. Sub-bit coal has kilocalories of less than 6,100 per kilogram, according to the Indonesian energy ministry.  

 Bloomberg