October 08, 2008

Chinese coal prices will rise to record this year - KGI

According to investment bank KGI Securities Co Chinese coal prices will rise to a record this year as demand surges. As per data from the McCloskey Group Ltd China, the biggest producer and user of coal became a net importer of the fuel for the first time this year. The resulting reduction in supply on global markets has helped push benchmark Australian prices at Newcastle Port to a record in August 2007.

Mr Steven Liao a Taipei based analyst at KGI said that Coal prices are likely to hit a new high in the fourth quarter. China’s economy will maintain steady growth and coal demand is particularly strong in the fourth quarter.

According to McCloskey Chinese spot prices for coal used by steelmakers rose to a record CNY 813 (USD 108.24) per tonne in August 2007. The price for coal used to generate power was last month just CNY 3 off its record, reached in February 2007.

Mr Huang Teng manager of Beijing’s LT Consultants Ltd said that coal prices were likely to peak in 2008 before falling in 2009 as mining companies expand capacity and better port and transportation projects are completed.

China’s economy grew at the fastest pace in 12 years in the second quarter, expanding at an annual 11.9%. Growth was powered by investment in factories and real estate.