Business

Tuesday November 27, 2007

Newcastle coal at record price again



SYDNEY: Coal prices at Australia's Newcastle port, a benchmark for supplies in Asia, rose to a record for a fifth week on concern there will be supply shortages as mining companies are advised of capacity restrictions next year.

Power station coal for delivery within the next three months gained A$4.15, or 4.9%, to US$88.63 a tonne in the week ended Nov 23, according to the globalCOAL NEWC Index, an Asian benchmark calculated each Friday.

Consumption, buoyed by China, which became a net importer of coal for the first time this year, has outpaced exports from Australia, Indonesia and South Africa. Mining companies in Australia's Hunter Valley must share 95 million tonnes of capacity at Newcastle next year, 18% less than their stated demand.

“There seem to be ongoing disappointments about rail capacity constraints and port capacity constraints,'' said Clyde Henderson, a coal analyst at Barlow Jonker Pty, a unit of Edinburgh-based Wood Mackenzie Consultants Ltd. “On top of that, we're now getting toward the start of the Northern winter which is a higher-demand period in Japan and Korea.''

Credit Suisse Group last week raised its 2008 forecast for Asian contract prices by US$10 a tonne to US$80 a tonne for the year starting April 1, citing supply disruptions caused by excessive rain in Indonesia and infrastructure constraints in Australia that are putting a further strain on the market.

Banpu Pcl, Thailand's biggest coal mining company, has been forced to delay shipments from the Indominco mine to the next quarter because of heavy monsoon rains, Phillip Securities said in a Nov 22 report, citing unnamed officials at the company.

Rio Tinto, the world's largest mining company, may not be able to meet orders to export coal from Hail Creek and Blair Athol mines in Queensland state because of congestion at Dalrymple Bay port, spokeswoman Amanda Buckley said. – Bloomberg

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