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    Australia port eyes cutting Q2 coal quotas-sources

    Friday February 29, 2008, 4:41 pm

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    SYDNEY, Feb 29 (Reuters) - Australia's Newcastle port, the world's largest coal terminal, is considering reducing shipping allocations to coal producers in the second quarter to cut rising ship queues and waiting times, producers and traders said on Friday.

    Port Waratah Coal Services (PWCS), operator of the port, has notified producers this week that the port's year-to-date throughput was 1.1 million tonnes behind target and has requested miners to voluntary reduce their export allocations, said a marketing manager at a mid-size coal producer.

    PWCS also said that more vessel arrivals were expected to add another 400,000 tonnes to the backlog, coal traders reported.

    "So you can probably imply that they might be cutting allocations by as much as 1.5 million tonnes," said the marketing manager.

    PWCS could not be immediately reached for comment.

    Any cut in quotas will put further pressure on tight global supplies, with Australian coal prices already reaching a record high of $150 a tonne this month, and may force major importers to look further afield for alternative supplies.

    Newcastle port has initially set total second-quarter shipping allocations at about 24 million tonnes, according to a Web site notice by rail operator Hunter Valley Coal Chain Logistics Team (HVCCLT).

    Port congestion and long vessel queues at Newcastle have been a headache for coal miners such as Centennial Coal (ASX: CEY.ax) and Xstrata Coal XTA.L, which have seen surging demurrage costs and lower sales cut into profits.

    The port, which reinstated a capacity balancing system (CBS) in May, cut allocations three times last year.

    The CBS system provides all coal producers with an equal pro-rata share of available coal chain capacity and matches vessel arrivals with capacity, so that excessive vessel queueing is eliminated. (Reporting by Fayen Wong)
 
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