Coal prices likely to drop due to competition

Buyers set to benefit: Utilities that may benefit include Chubu
Electric Power, Japan’s biggest coal buyer. Chubu Electric is now
negotiating prices of annual supply contracts with Rio Tinto, BHP
Billiton and other mining companies. The contracts that start on 1
April cover coal burned in power stations and set a benchmark for world
markets.

US market the exception: While prices declined in Asia and
Europe, US coal costs would stay high, according to Raymond James
Financial coal industry analyst James Rollyson.

Infrastructure at capacity: Utilities needed to rebuild
inventories and import terminals, and railroads, were operating at
capacity, preventing a surplus outside the US from entering the
country, he said. Mr Rollyson forecasts eastern coal prices of about
$US50 a tonne this year, 15 per cent higher than the five-year average,
and western prices of $US20 to $US22 a tonne. The western average is
about $US7.50 a tonne in the past five years.

The Australian Financial Review, 11/1/2006, p. 14

Source: Erisk – www.erisk.net 

Leave a Reply