JP Morgan raises 2008 coal price forecast
JP Morgan has forecast 2008 thermal coal contract prices between Australian miners and Japanese utilities will jump by over 60 per cent, citing Indian coal demand and global infrastructure constraints.
By Agencies |
SYDNEY: JP Morgan has forecast 2008 thermal coal contract prices between Australian miners and Japanese utilities will jump by over 60 per cent, citing Indian coal demand and global infrastructure constraints.
JP Morgan raised its contract price forecast to $90 a tonne, a 61.7 per cent increase from last year's agreed price of $55.65 and a 28.5 per cent increase from its earlier forecast of $70.
"Given the strong growth in demand for seaborne coal with limited new supply, we see overall strength for the international coal market," JP Morgan's commodities analyst David George said in a research report issued on Tuesday.
"We believe it is the growing demand for imported coal into India that could have the greatest impact on the industry," George said. George said India's plans to bring on 40-50 gigawatts of thermal coal capacity, to add to the existing 60 gigawatts of generation, could result in additional imports of about 80 million tonnes per year.
He added that a developing drought in China could reduce the country's hydro power generation and raise its coal import demand in 2008. Supply growth was expected to remain muted as rising domestic demand in Indonesia and Vietnam could reduce their exports, but some replacement tonnage could be sought from Kazakhstan, the bank said.
JP Morgan also raised its forecast for 2008 coking coal prices to $140 a tonne, a 42 per cent jump from last year's agreed price of $98.38. Its previous estimate was $120 a tonne. Australia is the world's second-largest exporter of coal, exporting 257 million tonnes in 2007, mostly from mines operated by Xstrata Plc , BHP Billiton Ltd and Rio Tinto Ltd.
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Severe congestion at Australia's Newcastle and Dalrymple Bay coal ports, combined with port problems in Russia and South Africa, have helped push spot thermal coal prices to double in 2007 to about $90 a tonne. News of China suspending coal exports, severe power shortages in South Africa and force majeure declarations by some Australian miners after heavy rain last week have also sent spot coal prices soaring to a record high of $102.75 a tonne, data from electronic platform globalCOAL showed on Wednesday. JP Morgan is forecasting 2009 thermal coal contract prices at $80 a tonne and coking coal prices at $120 a tonne.
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