Indonesian Coal Swaps Gain a Second Day; China Contracts Rise

Swaps prices for thermal coal from Indonesia, the world’s largest exporter of the fuel, gained for a second day, 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 rose 20 cents to $64.80 a metric ton on a net-as-received basis yesterday, Ginga said in an e-mail today. The February contract increased 20 cents to $63.90 a ton.

Indonesia raised its January coal benchmark price to $87.55 a ton 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 yesterday. The new price is the highest in six months.

Contracts for coal with a heating value of 5,500 kilocalories a kilogram for shipment to South China in the second quarter gained 10 cents to $86.90 a ton on a net-as-received basis, the energy broker said. The February contract also added 10 cents to $85.80 a ton.

Thermal coal price at Australia’s Newcastle port, the benchmark for Asian contracts, fell 60 cents or 0.7 percent, to $91.10 a ton in the week ended Jan. 11, according to IHS McCloskey, a Petersfield, U.K.-based provider of data. That was the first decline in four weeks.

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.

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