Indonesian Coal Swaps Snap Four-Day Declines; China Unchanged

Swap contracts for lower-quality thermal coal from Indonesia, the world’s biggest exporter, snapped four days of declines, according to Ginga Petroleum Singapore Pte. Prices for China were unchanged.

The swap for sub-bituminous coal with a calorific value of 4,900 kilocalories a kilogram for loading from Indonesia in the fourth quarter remained at $64 a metric ton on a net-as-received basis yesterday, the energy broker said in an e-mail today. The September contract rose 25 cents to $62.

The contract for coal with a heating value of 5,500 kilocalories a kilogram for shipment to South China in the fourth quarter was unchanged at $83 a ton on a net-as-received basis, Ginga said. The swap for September remained at $81.75.

The average price for coal at the port of Newcastle in Australia, the Asian benchmark, will be $90 to $95 a ton in 2012, Moody’s Investors Service said today. It compares with 2011’s average of $120 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. 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.