Asia Coal-Price clears $67 on Japanese negotiations

SYDNEY, Sept 24 (Reuters) - Benchmark Australian spot
thermal coal traded above $67 a tonne on Monday amid final
negotiations between Japanese utilities and Australian
producers for 2008 contracts.

Traders said prices were also prodded higher on
expectations of a supply squeeze worsening in the fourth
quarter following news of Australia's Newcastle port cutting
fourth quartert export allocations by at least 1.7 million
tonnes. [ID:nSYD165280]

Thermal coal, used for power generation, rose 9 cents from
a week earlier to $67.04 per tonne, the globalCOAL NEWC index
showed on Monday, based on free-on-board (FOB) prices loaded at
Newcastle.

"Spot prices are taking cue from negotiations between
Japanese utilities and Australian producers, which are now
being discussed at between $69-$71 a tonne," said a source from
a major Australian producer.

Other industry sources said market sentiment had changed
significantly in the past week, following a bull run in the
coal swaps market which saw delivered coal prices into the
Amsterdam-Rotterdam-Antwerp (ARA) breaching $100 a tonne on
Thursday. [ID:nL20737001]

The move by Korean utilities to already secure 2008 term
contracts in anticipation of a worsening supply shortage next
year has also boosted spot prices.

Australian producers, including Rio Tinto (RIO.AX)(RIO.L)
and Peabody (BTU.N), this month concluded negotiations with
Korean utilities, such as Korea East-West Power Co (Kowepo) and
Korea Southern Power Co (Kospo), for 2008 term contracts at
about $66 a tonne.

Korea's Midland Power Co (KOMIPO) on Friday issued a tender
to buy 180,000 tonnes of bituminous coal, tender documents on
its Web site showed. [nSYD133199]

Vessel queues at Australia's Newcastle port dropped to a
10-month low of 44 this week, but still above the port's stated
target of 20 ships by November.