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Friday, 07 August 09
COAL-PRICE FORECAST RAISED AT MERRILL ON CHINA, INDIA DEMAND


Bloomberg reported that, Bank of America Corp.’s Merrill Lynch & Co. unit increased its price forecast for Asian power-station coal because of higher demand from India and China, the second-largest energy-consuming nation.

Merrill raised its projection for the benchmark coal burned by Japanese utilities in the year ending March 31, 2011, to $85 a metric ton from $80, analysts wrote in a note to clients dated yesterday. Goldman Sachs JBWere Pty. last month increased its forecast to $80 from $75 for the same period.

“Surprise strong buying by utilities in India and China” is driving thermal coal demand, Merrill analysts led by Sydney- based Stuart Howe said in the note. Prices at Australia’s Newcastle port, an Asian benchmark, have climbed 27 percent since the end of March and were at $76.58 a ton in the week ended July 31, according to the globalCOAL NEWC Index.

Power-station coal prices at Newcastle are rising on expectations that China will import more of the fuel, emerging demand growth in India, and improved economic conditions as credit markets recover, Merrill said.

Australian and Indonesian coal output have the biggest influence over the trade supply outlook, Merrill said. Rising production costs, declining exploration and development success, and rain in Indonesia suggest “supply growth is now limited,” Merrill said.

Source: Bloomberg



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