Uncertainty keeps coal prices high

Coal prices are likely to remain strong next year, close to this year’s average levels, because there are many supply uncertainties despite the emergence of the United States as a major exporter.

Coal prices surged to record highs this year after a shift from historically abundant supply to tightness due to a leap in Chinese demand, which prompted a cut in itsexports.
The consensus in the coal market is that next year may see a small dip in prices but, from 2009 to 2015, the trend will be upward.

“The general feeling is that the market is going to remain strong,” said Jim Lennon, an analyst at Macquarie Bank.

Deck Slone, vice-president investor relations and public affairs at US producer Arch Coal said: “Certainly we believe the world market will remain extraordinarily tight into 2008.”

Coal industry members who recently attended a closed-door industry event in Stockholm concluded that there would be a small surplus of around 10 million tonnes next year, which would cause a price dip in the second half.

New Zealand Herald