Extra supply puts wobbles in premium coke prices

<p>New mine capacity could initiate a decline in the record price levels for coking coal over the next 18 months, analysts say.</p> <p>JP Morgan Chase analyst John Bridges said prices could fall to US$ 90 tonne in 2007, down from present levels of US$125 for premium coke, the <em>Courier Mail</em> reports today (Monday, November 14).</p> <p>Slowing steel output and the capacity expansions at Australian coal mines, including BHP Billiton and Xstrata owned mines, will combine to weaken coking coal prices, Mr Bridges said.</p> <p>"With new capacity due on stream in Australia in late 2006, prices should weaken in 2007," he said.</p> <p>The prediction comes as Japanese steel makers enter the first round of price talks with iron ore producers.</p> <p>Meanwhile, steaming coal prices might also be on the slide following Taipower’s reported deal with Xstrata.</p> <p>Xtrata had agreed four one-year contracts with the Taiwan Power company at around $US40 a tonne &#8211 about US$5 a tonne below coal producers’ target price, the <em>Taipei Times</em> said.</p> <p>Analysts says the deal could create negative sentiment ahead of price discussions with Japanese utilities.</p> <p>But they anticipate that the larger volume, higher grade steaming coal contracts will remain steady at around US$45 a tonne.</p> <br />