AUSTRALIA’S ABREE SEES GLOBAL THERMAL COAL PRICES SLIDING 37% BY 2017

Thermal coal contract prices are expected to fall 37% to $82/mt by 2017, reflecting strong growth in exports from Australia, Indonesia, Colombia and emerging exporters such as Mongolia and Mozambique, the Australian Bureau of Resources and Energy Economics said Wednesday.

For Japanese fiscal year April 2012-March 2013, thermal coal contract prices are seen settling at around $115/mt, 13% lower than a year ago when prices were fixed at a record $129.85/mt, amid slackening demand, ABREE said in a report.

Australian producers and Japanese power utilities are yet to fix prices for annual supply contracts that are due to start delivery April 1.

Total global thermal coal imports are projected to increase at an average rate of 4% a year to reach 1,040 million mt by 2017, with most of the growth expected to occur in Asia, ABREE said in the report.

As economies in Asia grow and per capita income increases, a significant proportion of increased electricity demand is expected to be supplied by coal-fired power stations as coal remains a cheap form of energy for power generation and is widely available, the bureau said.

China’s thermal coal imports are projected to continue increasing, and robust growth in China’s coal consumption will be underpinned by strength in electricity demand associated with rapid economic growth, ABREE said.

China’s exports are projected to decline gradually to 11 million mt by 2017 from an estimated 13 million mt in 2011, reflecting strong domestic demand and weaker import demand in north Asia, the bureau said.

India is expected to remain one of the fastest-growing consumers and importers of thermal coal, with imports projected to increase at an annual average rate of 11%, growing from around 78 million mt in 2011 to 148 million mt in 2017, it said.

Australia’s thermal coal exports are projected to grow at an average annual rate of 11% to 271 million mt by 2017 as mines expand operations, boosting output and exports, ABREE added.

Indonesia’s thermal coal exports in 2012 are seen up 3% at 310 million mt compared with a year ago, underpinned by continued growth in exports to China and India and additional expansions to domestic production and infrastructure capacity, the bureau said.

The country’s coal exports are seen increasing at an average annual rate of 3% a year from 2013 to reach 351 million mt by 2017, aided by mine capacity expansions and investments in infrastructure, the report added.

Deepak Kannan, deepak_kannan@platts.com

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