Asia Coal-Prices fall towards $65, lowest in nearly 20 mths

Asia Coal-Prices fall towards $65, lowest in nearly 20 mths
Prices of power-station coal from Australia, a benchmark for Asia, dropped to a near 20-month low of just above $65 a tonne, on signs of a burgeoning surplus as the global slump dents demand. Prices could fall further in coming weeks, which would weigh heavily on the key 2009 term contract negotiations between Japanese utilities and Australian producers, some buyers and traders said on Monday. Thermal coal prices on the globalCOAL Newcastle weekly index dropped $11.02 from a week ago to $65.32 a tonne in the week ended Feb. 28. Prices are also down $1.18 from mid-last week. Prices are now at their lowest since July 17, 2007, when they stood at $64.88 a tonne. "It's quite obvious that results from recent South Korean tenders are showing that the market is flushed with coal," said a Singapore-based trader. "Producers are beginning to feel the pressure and are now pricing their coal lower." Latest spot tenders from South Korean utilities Korea Midland Power Co (KOMIPO) and Korea East West Power Co (KEWESPO) saw a deluge of coal offers from producers, with many firms placing their coal at a $3-$4 discount to market levels. KOMIPO received offers totalling 3 million tonnes of coal -- three times the amount it was seeking in the tender -- while KEWESPO received offers totalling of 2.34 million tonnes, when it was seeking a minimum of 500,000 tonnes. The KOMIPO tender also saw bidders from as far as afield as South Africa and Canada, which traders said was a sign that producers were having to work harder to sell their coal as demand from traditional markets wane. more...