Taiwan Power Co., the island's biggest electricity producer, cut planned coal purchases by 39 percent after the price of the fuel climbed to a record, a company official said.
The power producer bought 1.19 million metric tons of Indonesian coal, compared with 1.96 million tons it had sought in a tender, said George Hsu, director of the company's fuel department. Taiwan Power may issue another tender, he said, without giving a date.
The price of coal rose to a record for the week ended July 2 after storms worsened bottlenecks at Australia's Newcastle, the world's biggest coal port. Purchases by China, which became a net importer of the fuel this year, increased prices further.
“Things aren't looking good for power producers,'' said Shanghai-based Michael Wang, a coal analyst with KGI Securities Ltd. “Prices had spiked because of the bad weather in Australia and will ease off a bit now but in the long term, prices are still trending upwards.''
Taiwan Power awarded 11 panamax-sized vessels for coal with a minimum of 5,500 kilocalories out of the 20 it had planned in a June 7 tender, the trader said. It bought six panamax-sized ships of coal with a minimum of 5,000 kilocalories instead of eight, he said. A panamax-sized vessel can carry 70,000 tons of coal. Kilocalories are a measure of the amount of energy coal generates when burnt.
The price of benchmark Newcastle coal rose to a record of $70.88 a ton for the week ended July 2. Prices have eased to $67.56 a ton in the week ended July 6, according to the globalCOAL NEWC Index.
Taiwan's government owns 97 percent of the utility, which monopolizes transmission and generates about 75 percent of the electricity on the island. Coal-fired units accounted for 43 percent of the island's electricity output in May, compared with 23 percent by natural gas-fueled generators and 18 percent by nuclear reactors, according to Taiwan Power's Web site.
Details of the company's June 7 tender are as follows:
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Product: Minimum 5,500 kilocalories gross as received
Quantity: 1.4 million tons, to be shipped by 20
panamax size vessels
Delivery: Aug. 2 to Nov. 20
Port: Taichung and Kaoshiung
Bids close: June 21, 4:30 p.m. Taiwan time
Bid Validity: Aug. 21
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Product: Minimum 5,000 kilocalories gross as received
Quantity: 560,000 metric tons, to be shipped by eight
panamax size vessels
Delivery: Aug. 1 – Dec. 22
Port: Taichung Port
Bids close: June 21, 4:30 p.m. Taiwan time
Bid Validity: Aug. 21
