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Saturday, 10 October 09
COAL PRICES TIPPED TO SURGE BY 40% AS GLOBAL DEMAND RECOVERS NEXT YEAR


Power-station coal prices may climb by more than 40 percent in 2010 from current levels as a global economic recovery boosts demand from power plants and steel producers, an official from PT Bumi Resources said.

Benchmark thermal coal grades, those burnt by Japanese utilities, may rise to about $100 a metric ton in the fourth quarter of 2010, led by economic growth in Asia and under- investment in coal capacity, said Dileep Srivastava, senior vice president for investor relations at Bumi.

That compares with $69.85 a metric ton in the week ended Oct. 2 at Australia’s Newcastle port, according to globalCOAL NEWC Index data.

“Demand for coal in China, India and Indonesia will be sustained at higher levels, while demand should normalize” in developed countries, Dileep said in Singapore on Thursday.

China imported a record 48 million tons in the first six months, according to customs figures.

Spot prices at Newcastle reached a record $194.79 a ton in July last year, before the global recession cut output and electricity demand.

Futures for coal delivery to Rotterdam with a settlement on Jan. 10 rose to $77 a ton on Friday, according to data compiled by Bloomberg, compared with this year’s low of $51.75 on March 12.

Bumi estimates average prices at $61 to $62 a ton, excluding freight and charges, for coal shipped from its mines this year, compared with $73.30 a ton in 2008, according to a company presentation.

That compares with about $44 a ton in 2007, Dileep said, declining to give a forecast for next year.

UBS AG has raised its 2010 forecast for benchmark coal to $90 a metric ton from $80 a ton in 2010 in a report on July 6.

Market conditions are expected to tighten starting in the fourth quarter of this year, with prices peaking in 2011, UBS said.
Source: The Jakarta Globe / Bloomberg



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