Australian Coal Exploration and Price : Reaches Record on Supply Concern
Australia’s Newcastle port, a benchmark for Japan, South Korea and Taiwan, rose to a record on concern that demand is outpacing supply.
Prices for coal excluding shipping costs for delivery within three months rose $2.08, or 2.3 percent, to $91.77 a metric ton in the week ended Jan. 4, according to the globalCOAL NEWC Index, an Asian benchmark calculated each Friday. Coal prices surged 73 percent in 2007.
China’s increasing coal imports and falling exports, together with unusually heavy rain in Indonesia are driving a shortfall in supply to Asian customers in Japan, Taiwan and South Korea. Rio Tinto Group, Xstrata Plc and other mining companies in the Hunter Valley in New South Wales state had planned to ship 18 percent more this year than Newcastle, the world’s largest thermal coal export harbor, will be capable of handling.
“Last year the big reduction in China’s exports was the key change in the market and it’s a trend we really see continuing through this year,” said Gerard Burg, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “It’s not surprising from that point of view that prices are so much higher but they’ve run well beyond our expectations.”
China Imports
China, the world’s biggest energy consumer after the U.S, will remain a net coal importer for most of 2008, the National Development and Reform Commission said in a statement on its Web site Dec. 12. Imports rose 39 percent to 46.68 million tons in the first 11 months of last year, while exports fell 17 percent to 47.44 million tons, customs said Dec. 11.
The nation’s shipments dropped to 63 million tons in 2006 from 94 million tons in 2004, according to customs figures.
Newcastle will have capacity to load 95 million tons of coal this year, according to Port Waratah Coal Services Ltd., the operator of the two coal terminals at Newcastle. Growth in Asian thermal-coal demand may outstrip supply increases in the next few years, forcing power utilities to pay near-record prices for the fuel, UBS AG said in a Dec. 6 report.
Newcastle last year increased shipments of coal by 6.3 percent to 84.8 million tons, short of the planned 90.5 million ton target, due to bad weather and bottlenecks.
