February 3, 2010 / 8:50 AM / 10 years ago

UPDATE 1-Australia Newcastle coal port cuts export quotas

* Newcastle port to cut producers’ export quota by 1.7 mln T

* Export cut could support thermal coal prices - trade

* To spend $594 mln to expand capacity by 20mln T by 2012 (Recasts, adds details, trader comments)

PERTH, Feb 3 (Reuters) - Australia Newcastle port, the world’s largest coal export terminal, said it has cut miners’ export quota by 1.7 million tonnes to clear logjams and that it would spend A$670 million ($594.5 million) to expand capacity.

Traders said the cut in exports would likely affect some shipments that were due to sail to China, and may encourage affected buyers to source for alternative winter supplies.

Port Waratah Coal Services (PWCS), operator of the port, said it has cut producers’ export allocation by a total of 1.7 million tonnes mainly over February and March, after severe logjams at the terminal prevented the port from fulfilling its shipping target last month.

The port exported eight million tonnes in January, despite being scheduled to load 9.7 million tonnes.

The shortfall was also due to factors such as equipment breakdowns, adverse weather, power supply failures and vessel delay issues, PWCS said in a statement.

“That’s about 26 panamax-sized shipments that will be taken off the market and the most likely casualties would probably be the Chinese and South Korean buyers, which are both running quite low on stocks,” said a Singapore-based coal trader.

“That means some of these buyers may need to get some alternative supplies in the spot market and that may lend some support to prices.”

About 80 percent of the coal shipped through Newcastle is thermal coal used mainly by power stations. Companies exporting through the port include Xstrata Plc XTA.L, Rio Tinto Group (RIO.AX)(RIO.L) and Centennial Coal Ltd CEY.AX.

Australia thermal coal prices, a benchmark for Asia, fell from a week ago to hover around $90 a tonne, dragged down by fast-fading demand from China. [ID:nSGE605064]

Separately, PWCS said its board has approved to spend A$670 million to expand its nameplate capacity by 20 million tonnes to 133.3 million tonnes in 2012.

PWCS said the expansion at the Kooragang Island terminal would manage ongoing demand for Hunter Valley coal and comes after recently signing long-term coal export contracts with producers. (Reporting by Fayen Wong; Editing by Michael Perry)

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