China, the world’s biggest coal consumer, is poised to reduce imports of the commodity from Australia after the gap with domestic prices narrowed, according to DNB Markets.
The difference has closed to about $13 a metric ton from $30 in June including freight costs, Oslo-based DNB Markets, a unit of Norway’s largest bank, said in an e-mailed note today. Based on a two-month time lag for changes in the spread, inbound shipments will rise 10 percent in August before a “significant drop” entering the fourth quarter, it said.
“Any arbitrage should be interpreted as an incentive to import rather than buy domestically, which should employ more dry-bulk vessels,” DNB Markets said.
Australia is the second-largest exporter of coal, with 164 million tons of the commodity burned to generate power and 149 million tons of the variety used in steelmaking to be shipped in 2012, according to the most recent government estimates.
China’s benchmark power-station coal price rose for the first time in four months from the lowest level since October 2009. The commodity gained to a range of 625 yuan ($98.30) to 635 yuan a ton as of Aug. 26, according to the China Coal Transport and Distribution Association.