Indonesian Coal Swaps Climb a Second Day, China Contracts Fall

Indonesian lower-quality coal swaps rose for a second day yesterday, according to Ginga Petroleum Singapore Pte. The prices for shipments to China fell.

The August contract for sub-bituminous coal with a calorific value of 4,900 kilocalories a kilogram for loading from Indonesia gained 10 cents to $63.85 a metric ton on a net as-received basis yesterday, the energy broker said in an e-mail today. Swaps for the fourth quarter also climbed 10 cents to $65.60 a ton. Indonesia is the biggest exporter of thermal coal.

Coal with a heating value of 5,500 kilocalories a kilogram for shipment to South China in August slid 25 cents to $86.25 a ton on a net as-received basis, Ginga said. The swap for the fourth quarter dropped 50 cents to $88 a ton.

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. The grade is typically softer, with a dull, earthy appearance, according to the London-based World Coal Association. 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.

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