Coal news and updates

Hokkaido buys 300,000 mt in coal spot tender: Sources

Japan-based power utility Hokkaido Electric has purchased 300,000 mt of Australian thermal coal at a competitive price of slightly under $60/mt FOB Newcastle basis 6,322 kcal/kg GAR in a recent tender, market sources said Tuesday.

The deal would represent a new lower price level for Newcastle thermal coal sold into the Japanese market, although some recent Korean tenders have also settled at prices close to $60/mt FOB on a 6,080 kcal/kg NAR basis -- broadly equivalent to 6,322 kcal/kg GAR.

"From the Hokkaido customer side of view it is an attractive deal, if correct," one trader said.

Another trader speculated that the relatively low price in the tender was because Russian thermal coal had been aggressively offered to Hokkaido.

The Japanese utility closed the deal a week ago, market sources said, although they did not name the supplier.

Thermal coal fueled 29% of Hokkaido's power generation in the 2013 financial year when the utility's coal plants produced 2,430 MW of electricity, according to information on Hokkaido's company website.

Hokkaido Electric serves the northernmost part of Japan and is building three new 569 MW coal-fired generation units at its Ishikariwanshinko power plant, the first of which will be operational by 2019 and the last by 2028, the company said.

JAPAN CONSUMPTION STEADY

Hokkaido's tender result could be seen in the context of the recent settlement price of $73.45/mt FOB Newcastle for year-long Japan supply contracts involving Australian thermal coal with an October 1 start date on a 6,322 kcal/kg GAR basis.

Consumption of thermal coal in the Japanese market has remained relatively stable in recent months, the first trader said. He described the market for Japan currently as "quiet after the October price settlement."

The next staging post in the Japanese supply contract calendar is January 1, the starting date for 2015 year contracts, for which negotiations are due to begin in the next month.

In the Asia trading session, a December-loading 25,000 mt parcel of Newcastle 6,000 kcal/kg NAR thermal coal -- broadly equivalent to 6,322 kcal/kg GAR -- was bid at $64/mt FOB, and a similar-sized January parcel was bid at $64.50/mt through globalCOAL.

Market participants reported seeing a slight uptick in spot prices for Newcastle thermal coal this week as an indirect effect of firmer prices in the European market related to supply tightness for Ukraine.

Two 25,000 mt parcels of 6,000 kcal/kg NAR thermal coal for December and January loading at Newcastle port both traded at $64.25/mt FOB Monday.

Source: Platts