Coal Prices May Fall in Second Half as Shortage Eases, AME Says
March 22 (Bloomberg) -- Asian prices for coal used by power companies, which this month jumped to a record, may fall in the second half of 2004 as a shortage in China eases, increasing supplies available for export, AME Mineral Economics said.
Coal prices from Australia's Newcastle port, an Asian benchmark, rose 3.9 percent to $55.40 a ton in the week ended March 19, according to the globalCOAL NEWC Index. Australia is the world's biggest coal exporter, supplying so-called thermal coal to Asian generators such as Korea Electric Power Co.
Coal prices have surged in the past month as China cut shipments to meet domestic demand and a port accident reduced Australian exports. China shipped about 80.8 million tons of thermal coal last year, more than triple the amount exported in 1997 and one-sixth of total supply.
``China's domestic thermal coal supply problems will ease after the winter heating season and suppliers will be able to return to export markets,'' AME, a Sydney-based research company, said in an e-mailed report. ``If supply is increased that will tend to soften spot prices,'' said Greg Dean-Jones, the company's principal coal analyst.
Chinese coal exports fell by a third in January, according to the Tex Report, a Japanese newsletter.
China's winter usually ends as temperatures rise in late February and early March. China's annual exports will probably be lower than last year, Dean-Jones said.
Shipping Costs
The cost of shipping coal will stay high in 2004, maintaining Indonesia's position as the lowest cost provider to Japan, Taiwan and South Korea, which account for more than 40 percent of world coal trade, AME said.
South African producers will become more competitive against higher-cost Australian rivals with the planned expansion of the Richards Bay coal terminal, AME said.
In Western Europe, the world's second-largest thermal coal market, Colombia's lower production and shipping costs may help it grab market share from rivals, AME said.
After allowing for shipping costs, coal from Colombia is $2 a ton cheaper than Indonesia, $4 cheaper than South African coal and more than $10 cheaper than coal from Australia, AME said
To contact the reporter on this story: Gavin Evans
in Wellington gavinevans@bloomberg.net
To contact the editor on this story:
Reinie Booysen at rbooysen@bloomberg.net.
Last Updated: March 21, 2004 17:28 EST
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