November 5, 2010 / 8:36 AM / 10 years ago

China Coal-Prices hover at 10-mth high, seen rising further

* Prices hover at 10-mth high, seen climbing higher

* Port stocks fall for third week

* Overseas coal prices climb above $100/T on tight supplies,

By Fayen Wong

SHANGHAI, Nov 5 (Reuters) - China’s thermal coal prices at Qinhuangdao port, a domestic benchmark, clung to recent gains and lingered at a 10-month high, as fast-dropping temperatures lifted demand and helped draw down port stocks.

Prices could strike above 900 yuan ($135.1) a tonne by the end of the year due to seasonal storage and the possibility of colder-than-usual winter, traders and analysts said.

Chinese coal prices are already trading close to the high above 850 yuan ($127.6) posted in January this year, when prices rose steeply as China’s worst snowstorm in 50 years cut supplies and pushed demand sharply higher.

“This is only the start of winter and prices are already at 840 yuan. There is a lot more room for prices to climb over the next two months as the colder months approach,” said a coal trader in Hangzhou, whose firm produces and trades around five million tonnes of coal per year.

Coal with calorific value of 6,000 kcal/kg (NAR) was quoted in the range of 840 yuan to 850 yuan ($126.10-$127.60) per tonne in the week to Nov. 5, up 27 percent from a year ago.

Coal with a heating value of 5,000 kcal/kg gained at least 10 yuan to 625-635 yuan, according to the Qinhuangdao Seaborne Coal Market.

Stockpiles at Qinhuangdao fell for the third week to 6.8 million tonnes, data from the China Coal Transport and Distribution Association showed.

Chinese prices have spiked over 10 percent since September, amid growing speculation that China may again experience severely low winter temperatures, prompting traders and power stations to start stockpiling the fuel.

“Coal prices will continue the upward momentum and are likely to rise as much as 10 percent by the end of this year,” said industry analyst Song Zhichen from China Investment Consulting.

Coal prices are up around four percent so far this year.

Expectations that a winter price rally have encouraged some Chinese buyers to scout for overseas bargains, particularly from South Africa, as supplies from nearby Australia and Indonesia have been constrained by rain.

But high freight rates and strong international prices mean limited spot deals could be completed, overseas traders said, as many Chinese buyers were offering unattractive prices.

The general perception of tight supply in all coal exporting countries has continued to support prices across Australia to South Africa as has the expectation that any new European buying for the fourth quarter will push prices still higher.

Australia’s thermal coal prices, a benchmark for Asia, rose over $1 a tonne during the last week to climb above $100 a tonne, as continuing concern about wet weather in both Indonesia and Australia as well as Chinese buying interest boosted prices. [ID:nSGE69D0D7] Weekly Qinhuangdao prices for (Yuan) PORT STOCKS

>6,000 kcal/kg >5,000 Kcal/KG (Mln Tonnes) WEEK TO

840-850 690-700 6.805 Nov 02

825-835 675-685 7.066 Oct 31

760-770 640-650 7.289 Oct 25

775-765 625-635 6.387 Oct 18

775-765 615-625 6.377 Oct 11

755-765 615-625 7.057 Sept 27

755-765 615-625 N.A Sept 20

755-765 610-620 7.431 Sept 13

760-770 615-625 7.425 Sept 06

760-770 615-625 7.187 Aug 30

765-775 620-630 7.084 Aug 23

770-780 625-635 7.289 Aug 16

770-780 625-635 7.220 Aug 09

780-790 635-645 7.020 Aug 02

780-790 640-650 5.899 Jul 26

780-790 650-660 5.944 Jul 19

780-790 650-660 5.765 Jul 12

780-790 650-660 5.940 Jul 05 ($1=6.667 Yuan) (Editing by Ken Wills)

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