Indonesian Coal Swaps Decline a Fourth Day, China Prices Slide

Swap contracts fell for lower- quality thermal coal from Indonesia, the world’s biggest exporter of the fuel, declining for a fourth day, according to Ginga Petroleum Singapore Pte. Contracts for shipments to China also dropped.

The swap for sub-bituminous coal with a calorific value of 4,900 kilocalories a kilogram for loading from Indonesia in the fourth quarter fell 25 cents yesterday to $62.60 a metric ton on a net-as-received basis, the energy broker said in an e-mail today. The August contract was 10 cents higher at $60.50 on a net-as-received basis.

The swap for coal with a heating value of 5,500 kilocalories a kilogram for delivery to South China in the fourth quarter slid 40 cents to $84.10 a ton on a net-as- received basis, Ginga said. The August contract fell 40 cents to $82.20 on a net-as-received basis.

The price of thermal coal at Australian port of Newcastle declined $4.10 to $81.15 a ton in week ended July 20, according to IHS McCloskey, a Petersfield, U.K.-based provider of coal data. That was the second week of declines and the lowest since week ended Dec. 11, 2009

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.

To contact the reporter on this story: Fitri Wulandari in Jakarta at fwulandari@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net