South African Coal Declines to 2 1/2-Month Low as Buyers Prefer Indonesia

Coal export prices at Richards Bay, South Africa, site of the continent’s biggest facility for shipping the fuel, fell to the lowest in 2 1/2 months as buyers preferred Indonesian supplies of the fuel. 

Prices fell 1 percent to $119.74 a metric ton on average last week, according to Petersfield, England-based researcher IHS McCloskey. That’s the lowest since the week ended March 4. They’ve advanced 36 percent in the last 12 months.

“More people are buying directly the Indonesian material,” Emmanuel Fages, an analyst at Societe Generale SA in Paris, said by phone today. “You don’t have that much demand for the high grades at Richards Bay.” 

Indonesia is the biggest exporter of coal burned to make power. The country cut its reference price for sales of the fuel in May to the lowest since January, tracking a decline in the regional market, the energy ministry said on May 9. The price of coal with a gross energy value of 6,322 kilocalories a kilogram was cut for a third straight month to $117.61 a ton, free on board, from $122.02 in April. 

Transnet Ltd., which manages South Africa’s ports and rail system, plans to boost capacity of its Richards Bay coal line to 80 million tons a year to increase shipments from the terminal. While Richards Bay is capable of shipping 91 million metric tons of coal a year, it exported 63.4 million tons in 2009, Chief Executive Officer Raymond Chirwa said on March 30.

Expansion

The expansion project, which is still in the planning stage, will cost about 5.1 billion rand ($758 million), Moira Moses, Transnet group executive for capital projects, said in an interview on May 6. 

Richards Bay Coal Terminal’s owners include Exxaro Resources Ltd. (EXX), BHP Billiton Ltd., Anglo American Plc, Xstrata Plc (XTA), Total SA and Sasol Ltd. 

Power-station coal prices at Australia’s Newcastle port, an Asian benchmark, declined 1.6 percent in the week to May 20. Prices at the New South Wales port fell to $116.80 a ton from $118.74 the previous week, according to the globalCOAL NEWC Index. 

European coal derivatives declined. Coal for delivery to Amsterdam, Rotterdam or Antwerp with settlement next year fell $1.50, or 1.2 percent, to $126.75 a ton by 11:32 a.m. in London. 

Profit from running coal-fired power plants for next month, the so-called clean-dark spread, is about 6.77 euros ($9.47) a megawatt-hour, compared with 5.80 euros from burning natural gas, Bloomberg data showed. The calculation uses electricity prices in Germany and takes emission costs into account. 

December carbon-dioxide permits under the European Union cap-and-trade system fell 0.9 percent to 16.24 euros. Gas for delivery in the six months through September 2012 to the U.K., Europe’s biggest consumer of the fuel, fell 0.5 percent to 63.10 pence ($1.02) a therm in London. Source: Reuters