Asian coal prices expected to rise - Breaking News - Business - Breaking News

Asian coal prices expected to rise -

Asian coal prices are likely to rise for reasons including strong domestic demand in China and Indonesia as well as Australian port congestion, analysts and industry executives said.
"Far Eastern prices will be firm thanks to shortages in China and a continuing increase in demand in India and Korea," Colin Gubbins, director of consultancy The McCloskey Group (TMG), told the McCloskey Asian coal conference in Jakarta.
Kaz Tanaka, vice-president director of PT Arutmin Indonesia, a unit of PT Bumi Resources Tbk, said coal supply to the Asian market had been hampered by queues at Australian ports.
"Demand for coal has been fuelled by the growing economies of China and India," Tanaka said.
Benchmark Australian coal spot prices fell to a two-month low this week but Gubbins forecast prices will still pick up.
Demand from China and India will grow by 47.6 per cent and 17 per cent respectively this year, leading to a 6.1 per cent increase in demand in Asia to 325 million tonnes in 2007, Gubbins said.
He said there was a risk of the Atlantic coal market being oversupplied in 2007 but added that the Asian market was "on fire - only Indonesia can douse the flame of shortage".
Indonesia is among the world's top coal exporters, along with Australia. Indonesia's coal production is seen rising to 370 million tonnes in 2025 from 193 million tonnes last year, energy ministry data shows.
However, conference delegates said most of Indonesia's rise in output is likely to be absorbed by domestic consumers - exports are expected to increase only slightly to 150 million tonnes in 2009, from 148 million tonnes last year, and will stay at the 150 million level until 2025.
Richard Anderson, Coal Technology Manager of PT Multi Resources Indonesia, said that as well as rising domestic demand, Indonesian miners will also face higher costs in future.
"The challenge to the industry will be how to manage mining costs and especially logistics as mining moves to remote locations," Anderson said.
Faced by lengthy ship queues at Australia's Newcastle port, tightening Chinese supplies and limited Indonesian tonnage due to months of rain, Asian buyers have been forced to buy high-quality coal from as far afield as South Africa.
The McCloskey Group forecast demand from China at 15.5 million tonnes this year, likely to climb to 18.5 million tonnes in 2008, while it sees India's demand at 34.3 million tonnes in 2007, rising to 38.4 million tonnes next year.