AusRAIL, Market Sectors

Thermal coal demand strong as big port volumes slow

<p>Strong Asian demand for thermal coal should keep contract prices above the US$50 a tonne mark for the third year in a row, according to a report by Citigroup.</p> <p>Thermal coal prices have remained solid since recovering from the US$27 a tonne being paid by Japanese customers in 2003, the lowest in 25 years.</p> <p>Strong demand at the world’s two busiest coal ports &#8211 South Africa’s Richards Bay Coal Terminal and the port of Newcastle &#8211 is keeping prices higher as both ports have seen a slowing in total volumes in the last two months.</p> <p>Richards Bay’s volumes dropped in October because of the breakdown of a shiploader and maintenance on another.</p> <p>The port of Newcastle has been battling a near-record vessel queue after planned maintenance, weather delays and a spike in demand has put a strain on port capacity since September.</p> <p>The vessel queue, now at 52, should ease by January ahead of about 20m-25m tonnes of additional port capacity coming on stream by the end of the first quarter next year. </p> <p>Updated information from the Hunter Valley Coal Chain Logistics Team (HVCCLT) this morning (Monday, December 4) suggests the queue should fall to 43 by Christmas.</p> <p>Earlier information had suggested that the queue could reach a record 56 vessels, but shiploading and additional rail capacity from the Australian Rail Track Corporation’s (ARTC) $80m Sandgate flyover has boosted capacity.</p> <p>The present peak in demand at Newcastle would ensure that thermal coal prices would remain above the US$50 a tonne mark, the Citigroup report said. </p> <br />