Despite dropping slightly for the second week in a row, spot prices for thermal coal at the Port of Newcastle are still running at near-record levels.

According to electronic trading platform globalCOAL, the Newcastle price, which effectively is the benchmark for Asia, dropped $2.40 to $132.05 a tonne for the week ending February 29.

Despite the slight decrease, current prices are still running at levels 40 per cent higher than at January 25.

Strong demand from Asian coal buyers has resulted in growing queues at the port.
According to the Hunter Valley Coal Chain Logistics Team’s website, as at midnight March 3, 38 coal carrying vessels were queued awaiting loading.

With average waiting times currently around 15 days, up from 9.33 days in mid-February, demurrage costs are a major concern for coal producers.

In a statement on March 3, Australian Competition and Consumer Commission chairman Graeme Samuel said a draft determination, proposing to authorise a capacity balancing system for the Port of Newcastle, had been issued.

"The ACCC is of the view that the proposed capacity balancing system is likely to result in a net public benefit," Mr Samuel said.

The statement said although such a system should reduce vessel queues in the short term, it was unlikely to be effective beyond December this year, as it removed the incentive for industry and government to develop long-term solutions.

“The ACCC has always considered that queue management systems are appropriate as short term transitional measures only. In this case, while the CBS has effectively been in operation at the Port of Newcastle since March 2004, industry and governments have failed to adequately address ongoing capacity issues within a reasonable amount of time,” Mr Samuel said.