The price of coal used to generate electricity in Asia may
rebound after its biggest decline in six years as China imports unprecedented
amounts of the fuel to power its growing economy.
Thermal coal at the Australian port of Newcastle, the benchmark price for Asia,
may average A$120/MT this year, according to the median of five analyst
estimates in a Bloomberg News survey. Prices slipped 12 per cent to $111.35 in
2011, the biggest annual drop since 2005 and the first since 2008, IHS McCloskey data show.
Prices rose 46 per cent in 2010. Newcastle
coal rose to the highest level in almost three years in January 2011 as the
flooding in the state of Queensland cut exports by 33 per cent. Prices have
since slid as China's buying eased and the availability of supplies from South
Africa & Mongolia undercut
Australian shipments, according to Peter Richardson, chief metals economist at
Morgan Stanley in Melbourne.
“We saw a big import increase in China as well as a lift in
domestic production, which effectively ended when inventories were rebuilt, and
as a consequence, the market was much better supplied,” said Richardson.
China's highest domestic coal prices in more than two years relative to
Newcastle supplies, combined with an increase in the amount utilities can
charge customers for their power, has encouraged electricity producers to seek
more supply from overseas just at the time when unfavorable weather limited the
output. The La Nina weather system, which contributed to flooding at Australian
mines a year ago, is bringing heavier-than-normal rainfall to the country
again, according to the Bureau of Meteorology.
Leave a Reply