Singapore: Sanford C. Bernstein and Company raised its 2011 price forecasts for coal used in steelmaking and burned in power stations after the worst floods since 1974 in Australia's Queensland state disrupted supplies.
Coking coal, used primarily in steelmaking, may average $269 (Dh987.87) a metric tonne in 2011, 10 per cent more than previously forecast, Michael Parker, a Hong Kong-based analyst at the energy consulting company, said in a report yesterday. The forecast for thermal coal was increased by 12 per cent to $115 a tonne, with a decline to $105 expected in 2012.
Flooding in Australia's Queensland state has curbed operations at 85 per cent of mines in the area and crippled transport. Queensland exported 59 million tonnes of thermal coal and 128 million tonnes of coking coal in the year to September 2010, representing 8 per cent of the seaborne thermal coal market and 55 per cent of the global coking coal trade.
"Current estimates suggest supply disruptions, which have affected the mines in the region as well as the ports, rail systems and roads in the area, could continue for three months," Parker wrote in the report.
Chinese thermal coal consumption may have exceeded 3.5 billion tonnes in 2010 with production capacity growth in "double digits" in 2011, Bernstein said. Most of Australia's thermal coal is mined in New South Wales, and Queensland contributed 39 per cent of the country's total thermal coal production in 2010, according to the report.
Asian benchmark
Power-station coal at the New South Wales port of Newcastle, an Asian benchmark, climbed to $136.30 a ton in the week to January 14 from $129.90 the previous week, according to the global Coal Newc Index.
In Europe, a sustained rise in coal prices may prompt a switch to natural gas, although the effects are likely to vary across countries, according to the Bernstein report. Coal-fired plants account for 30 per cent of the European Union's installed generation electric capacity share compared with 23 per cent for gas.
