as we all predicted

Longest coal slump since 2005 poised to end
Bloomberg reported that Australia coal for power stations is set to end its longest slump in 7 years as producers reduce output, raising the prospect of price increases just as colder weather in the northern hemisphere boosts fuel demand.

According to UBS, thermal coal at the Australian port of Newcastle, the benchmark for Asia may rise to more than USD 100 a metric tonne in the 3 months ending December 31st, from USD 84.25 a tonne as of September 28th. Macquarie Group predicts prices will aver age USD 98 for the rest of the year while Bank of America and Wood Mackenzie forecast the fuel will cost USD 92.

An increase in prices would snap four straight quarters of declines, coal's worst streak since 2005, and underscore how companies from Alpha Natural Resources, the second-largest US producer, to Indonesia's PT Berau Coal Energy have been cutting output in response to slowing economic growth.

According to UOB Kay Hian, the securities broking unit of Singapore's third biggest bank, China, the world's biggest producer reduced capacity by more than Australia's entire output after prices tumbled 22% in the H1 of the year. Chinese utilities have started rebuilding inventories.

Mr Riaz Hyder an analyst at Macquarie in Jakarta said that "There has been a significant level of supply cuts, which means that we should at least have a relatively firm floor on the thermal coal price of around USD 85 a tonne to USD 90 a tonne. We don't see a lot of downside to that because of the supply response in addition to seasonal improvement in demand."

Source - Bloomberg

(www.coalguru.com)