September 07, 2008

Newcastle coal price reaches record on limited supply

Bloomberg reported that energy coal prices at Australia's Newcastle port, the world's biggest export harbor for the fuel, rose by 1.3% to a record on expectations of supply shortages in Asia and a disruption to deliveries from a Queensland mine.

According to the globalCOAL NEWC Index, coal for immediate delivery at Newcastle rose by 96 cents to AUD 76.95 a ton in the week ended October 26th 2007. The previous all time high was AUD 76.16 reached two weeks ago. It said that supply has struggled to meet demand this year because of bottlenecks in producer countries including Australia and South Africa and as China. Anglo American Plc, the world's second biggest mining company, last week declared force majeure on shipments from the Dawson mine.

Mr Rory Simington a senior coal analyst at AME Mineral Economics in Sydney said that “It is the expectations that demand continues to outpace supply so the market is in deficit; it's about people's perceptions of what is around the corner. We're coming into a period of higher demand, winter is approaching, and people are wondering where the additional supply is going to come from. There is a good chance it's going to have a seven in front of it, a very good chance. We have increased our price forecast a couple of times, we've been surprised by the strength of the prices.''