Indonesian Coal Swaps Snap Four-Day Loss; China Contracts Gain

Swaps prices for thermal coal from Indonesia, the world’s largest exporter of the fuel, rose for the first time in five days, according to Ginga Petroleum Singapore Pte.

The swap for Indonesian sub-bituminous coal with a calorific value of 4,900 kilocalories a kilogram in the second quarter gained 10 cents to $64.60 a metric ton on a net-as-received basis on Jan. 11, Ginga said in an e-mail today. The February contract climbed 10 cents to $63.70 a ton.

Indonesia raised its January coal benchmark price to $87.55 a ton today, up from $81.75 in December, the directorate general of coal and minerals at the energy and mineral resources ministry said in a statement on its website.

Contracts for coal with a heating value of 5,500 kilocalories a kilogram for shipment to South China in the second quarter advanced 50 cents to $86.80 a ton on a net-as-received basis, the energy broker said. The February contract gained 20 cents to $85.70 a ton.

Lower-priced domestic supplies will displace Chinese coal imports this year, Sanford C. Bernstein said in a report e-mailed today. The benchmark Qinhuangdao coal price will average 650 yuan ($104.60) a ton in 2013 and 2014, down 7 percent from 2012, according to the report.

Qinhuangdao coal was unchanged at 620 yuan to 630 yuan a ton as of yesterday compared with a week earlier, according to data today from the China Coal Transport and Distribution Association. Stockpiles rose to 6.82 million tons.

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 better-quality stock. Sub-bit coal has fewer than 6,100 kilocalories per kilogram, according to the Indonesian energy ministry.