Monday, December 22, 2008
Coal outlook dim as export prices tumble
Matt Chambers | December 22, 2008
Article from: The Australian
THE outlook for Australia's coal exporters has continued to weaken, with reports of further falls in contract thermal coal prices.
Japanese newsletter The Tex Report said first coal contracts for Japan's next financial year had been signed, with utilities getting coal at the export port at between $US70 and $US80 a tonne -- up to a 45 per cent discount from this year's price.
The report comes days after Xstrata Coal locked in $US80 a tonne prices for Australian coal for the 2009 calendar year, a nearly 50 per cent drop on recent contracts it signed at $US155 a tonne for the year starting October 2008.
Analysts said the outlook for thermal coal, which is used in electricity production, looked weak and Xstrata, the world's biggest thermal coal exporter, had moved to lock in prices to restrict further risk. NSW miner Gloucester Coal has also started to sign thermal coal contracts at well below this year's price. On Friday, Gloucester said it had locked in about 500,000 tonnes of sales for 2009-10 at an average above $US80 a tonne.
While better than the reported deals, it is well below last year's benchmark of $US125 a tonne.
Thermal coal prices are weakening as global energy prices slump and could drop further if oil prices continue to hold under $US40 a barrel. Credit Suisse analysts last week said oil at $US50 should correlate to a coal price of about $US80 a tonne.
A sudden drop in demand for coking coal, a better quality product used to make steel, is expected to have a flow-on effect as producers sell into thermal markets. "As a countermeasure to any softening in coking coal demand, the company will deliver into additional thermal coal contracts," Gloucester said.
0 comments:
Post a Comment