Hi AllCoking coal prices may touch $200/tn in 2010-11 Jayajit...

Hi All

Coking coal prices may touch $200/tn in 2010-11

Jayajit Dash / Bhubaneswar September 29, 2009, 0:53 IST

Driven by surge in imports of coking coal by China, growth in Japanese steel output and signs of recovery in the Indian economy, spot prices of the raw material are expected to firm up in the international market.

Global prices of coking coal, which are currently hovering around $160-170 a tonne, are expected to harden further and reach $200 a tonne in 2010-11, says a report by Citi Investment Research and Analysis, a division of Citigroup Global Markets Inc.

The report has projected the price of the semi-soft variety of coking coal at $120 a tonne, up from the existing price of around $100 a tonne.

The sea-borne coking coal prices have sharply moved from $130 a tonne to $160-170 a tonne in the past three-four months as Chinese imports of the raw material have increased exponentially this year.

Coking coal imports by China are projected at 25.5 million tonnes this year, a 269.56 per cent jump over 2008. The surge is attributed to a dip in the country’s domestic production as it plans to close more than 4,000 small coal mines by 2010 to improve safety and drive consolidation in the coal sector.

“The spot prices of coking coal in Australia have touched $170 a tonne and this upward movement in prices is mainly due to an unexpected growth in imports by China. In fact, imports by the country in the past six months is comparable to what it usually imports in a period of 18 months”, said Ganesan Natarajan, president and chief executive officer, Ennore Coke.

Ennore Coke, a domestic manufacturer of metallurgical coke, which uses imported coking coal as the raw material, had settled its contracts for 2009-10 at around $130 a tonne with the international suppliers. However, Natarajan ruled out any further hardening of prices and said that premium hard coking coal rates in 2010-11 are expected to remain at the current level of $170 a tonne.

Dipesh Dipu, principal consultant, Pricewaterhouse Coopers said, “The coking coal prices in the short run, particularly in the second half of the year, may depend on the impact of Chinese order for the smaller mines to merge with the larger ones. The prices in 2011 are also expected to be in line with the prevailing prices or may be a few dollars higher than those of 2010.”

He indicated that the increase in global coking coal prices was set to impact the operations of the domestic steel makers who heavily depend on imports for their requirements.

Higher coking coal prices would mean greater contract prices for the domestic steel makers and this is bound to impact their margins, concurred Shashi Kumar, advisor (coal), NTPC and former chairman, Coal India Ltd (CIL).

Apart from coking coal prices, the outlook for thermal coal prices is also robust and the contract price for this variety of coal is projected at $80 a tonne in 2010-11.

“The spot price for internationally traded thermal coal in the second half of this financial year is likely to hover around $70 a tonne. This may primarily be attributed to strength in demand from power producers in emerging markets, including India”, said Dipu.

In the domestic market, CIL has sought a moderate hike in coal prices as its average prices were 30-40 per cent cheaper than the prevailing international prices. The prices of coal in India were last revised in December 2007.

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Thermal Coal Prices May Rise To $90/Ton In 4Q 2009 -UBS

Thermal Coal prices may rise to $90/ton in 4Q 2009 on growing demand from China, India, according to UBS analysts in investor note. "We expect China 'arbitrage buying' to return as seaborne thermal coal prices drift lower. China can stabilize and lift seaborne prices in these conditions."

India's coal imports from South Africa also sign of strong demand, say analysts. "The commissioning of new power capacity amid poor quality local coal resources could provide strong upside for Indian coal demand." But weak demand from Europe, Japan may weigh on prices - along with higher exports from Indonesia adding to regional supply, according to note.
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India to invite bids for 4 more ultra mega power projects
Tuesday, 29 Sep 2009.

“Except Orissa for all other plants, coal will have to be imported.........

It is reported that the government will invite bids for four additional ultra mega power projects.

Mr Mehak Kasbekar in an exclusive interview with CNBC-TV18 said that What we are picking up from sources is that the government will invite bids for four additional UMPPs or the ultra mega power projects. The RFQs for the same will be floated as soon as October.

He said that “Environmental clearances from the states for this land acquisition are almost complete. So, October is the deadline we are looking at. Projects have been identified in four states Tamil Nadu, Orissa, Andhra Pradesh and Chhattisgarh. Each of these would be for 1,000 MW and we are looking at about 16,000 MW of capacity and all of this definitely for the Twelfth Plan.”

Mr Kasbekar further said that “Except Orissa for all other plants, coal will have to be imported. So this may be a hindrance for some private bidders. But October is the deadline we are looking for those four projects to come in.”
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