Indonesian Thermal Coal Swaps Extend Gain; Australia Rain Passes

Swaps prices gained a fourth day for thermal coal from Indonesia, the world’s largest exporter of the fuel, 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 added 5 cents to $66.15 a metric ton on a net-as-received basis yesterday, Ginga said in an e-mail today. The contract for February rose 20 cents to $64.85 a ton.

Contracts for coal with a heating value of 5,500 kilocalories a kilogram for shipment to South China in the second quarter dropped 45 cents to $87.25 a ton on a net-as-received basis, the energy broker said. The February contract rose 5 cents to $85.60 a ton.

Prices of power-station coal at Australia’s port of Newcastle, a benchmark grade for Asia, will rebound this year amid rising demand from China, according to Standard Chartered Plc. Prices will increase to $100 a ton in 2014 after averaging $95 a ton this year, Serene Lim, an analyst at the bank, said at a conference in Singapore yesterday.

Coal mines in Australia are returning to normal after rains from ex-tropical cyclone Oswald passed in Queensland, limiting price increases for the commodity.

Newcastle coal closed little changed at $95.40 a ton yesterday after climbing 1.3 percent on Jan. 28, the most in more than three months, according to data compiled by Bloomberg. Xstrata Plc’s operations are back to normal after a brief suspension because of rain, and BHP Billiton Ltd.’s sites are operating, the companies said yesterday.

Australia Rains

Prices surged in 2011 after flooding inundated about three-quarters of Queensland state, shutting mines and prompting BHP Billiton and Rio Tinto Group to notify customers they would miss shipments. The deluge from Oswald has swamped rail lines and disrupted output from producers including Yancoal Australia Ltd., a unit of China’s Yanzhou Coal Mining Co. in the Bowen Basin, the biggest source of Australia’s hard coking coal.

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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