Indonesian Coal Swaps Snap Four-Day Gain; China Prices Unchanged

Swaps prices fell for thermal coal from Indonesia, the world’s largest exporter of the fuel, ending four days of gain, 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 dropped 5 cents to $66.10 a metric ton on a net-as-received basis yesterday, Ginga said in an e-mail today. The contract for February declined 25 cents to $64.60 a ton.

Contracts for coal with a heating value of 5,500 kilocalories a kilogram for shipment to South China in the second quarter were unchanged at $87.25 a ton on a net-as-received basis, the energy broker said. The February contract fell 10 cents to $85.50 a ton.

Rio Tinto Group, the world’s second-biggest mining company, declared force majeure on contracts to sell coal from its Kestrel mine in Australia after flooding from ex-tropical cyclone Oswald damaged a rail system.

The deluge from Oswald left six people dead, swamped rail lines and disrupted mining operations in Queensland. Xstrata, the world’s largest exporter of thermal coal, declared force majeure on Jan. 29 because of damage on the rail line.

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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