Surge in Australian coking coal earnings expected

Surge in Australian coking coal earnings expected

According to the Australian Bureau of Agricultural and Resource Economics (ABARE), Australian earnings from exports of coking coal are predicted to rise by 43% to over $9.2 billion in 2004-2005 due to higher volumes and rising prices. Strong world demand, especially from Asia, and disruptions in supply channels, are reported to be the reasons for the surge in coking coal prices. According to market sources, the current price level of Australian origin coking coal is at around $85-90/mt on FOB basis. However, the actual market level of this commodity is expected to be set after negotiations between Japanese buyers and Australian suppliers are concluded. ABARE stated that China's decision to reduce its coal exports in order to meet domestic demand has provided opportunities for other producers, particularly Australia and Indonesia. Accordingly, with its exports forecasted to decrease, China will continue to play a major role in the global market for coking coal. Also, with the global surge in steel production, market sources predict that demand for coking coal will likely jump by 6% in 2004 and by 2% in 2005.