Asian Coal Prices May Rise 22% in 2008, Goldman Says

(Bloomberg) — Japanese utilities may have to pay 22 percent more for Australian coal next year after South Korean buyers locked in supplies seven months early, anticipating a shortage, Goldman Sachs JBWere Pty. said.

Prices of thermal coal may jump to $68 a metric ton, the Melbourne-based securities firm said in a report yesterday, increasing an earlier forecast by 10 percent. Korean utilities ordered one-quarter of their planned 2008 purchases from Australia at about $66, before contracts start April 1, it said, citing McCloskey’s Coal Report


The “unprecedented” Korean purchases signal concern among buyers about availability next year, Goldman said. Asian benchmarks for thermal coal sold under annual contracts are poised to rise to a record for a second year after China became a net importer of the fuel for the first time. Contract prices were settled at a record $56 for the year that started April 1.

“With spot thermal coal prices ex-Newcastle currently around $67 a ton and the Asia-Pacific seaborne market more likely to tighten than ease over the next few months, we believe the major Australian coal suppliers have already established a floor price around $66-$68 a ton for next year’s contract with the Japanese power utilities,” Goldman analysts Malcolm Southwood and Paul Gray said in the report.

Bloomberg