AusRAIL, Market Sectors

Record thermal coal prices as China flows backwards

<p>Cuts to China’s thermal coal exports this year have pushed Australian producers to strong price settlements with Japanese power companies for the 2007&#4708 year.</p> <p>Most of China’s thermal coal has been used for its domestic power generation, but the booming economy had benefited from being able to export some of its coal stocks.</p> <p>But since 2004, China has found itself unable to keep up with its own domestic demand for steaming coal, this year slashing its forecasted export volumes to just 50m tonnes.</p> <p>Central Queensland Ports Authority chief executive Leo Zussino told the Surat Basin Coal Conference in Brisbane on Tuesday (March 6) that China now seemed to find itself able to import thermal coal at a better price than it was receiving to export it.</p> <p>Australia’s major coal producers hope that up to 4bn tonnes of thermal coal in the Surat Basin, in southern Queensland, will be tapped soon.</p> <p>Several rail and port upgrades would need to be completed before the bulk of the coal can begin moving overseas.</p> <p>The 45m-47m tonne drop in China’s thermal coal exports is equivalent to about 40% of Australia’s booming coal exports, opening up an opportunity for Australia to take more of a share of the global market.</p> <p>Now some reports suggest that Japanese power companies are locking in thermal coal prices of up to US$55 a tonne free on board (FOB) for next year’s contracts.</p> <p>It represents a jump of about 5% on last year’s price.</p> <br />