Indonesian Lower-Quality Coal Swaps Rise; China Prices Drop
Swap contracts rose for thermal coal from Indonesia, the world’s biggest exporter of the power- station fuel, according to Ginga Petroleum Singapore Pte. Prices for delivery to China dropped.
Sub-bituminous coal with a calorific value of 4,900 kilocalories a kilogram for loading from Indonesia in October gained 5 cents to $61.20 a metric ton on a net-as-received basis yesterday, Ginga said in an e-mail today. The fourth-quarter contract climbed 5 cents to $62.30 a ton.
The contract for coal with a heating value of 5,500 kilocalories a kilogram for delivery to South China in the fourth quarter fell 5 cents to $83.55 on a net-as-received basis, the energy broker said. The swap for October was 5 cents lower at $82.95 a ton.
China’s benchmark coal price may rise to 650 yuan ($103.23) a ton in the fourth quarter, up 3 percent from the previous three months, amid reduced inventories and production cuts, UOB Kay-Hian Ltd. said in an emailed note today.
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.