Metals News
Coking Coal Price to Fall on Softer Demand, Mackenzie Says
industry news
Oct 20,2011

Oct 19, 2011 (Bloomberg) -- Steelmaking coal prices will fall below $240 a metric ton by the fourth quarter of 2012 as demand eases and supply improves following flooding in Australia, forecaster Wood Mackenzie Ltd. said.

"Prices have started to fall from the last quarter and will continue to decline due to softening demand and the recovery of supply from flood-hit basins earlier in the year,” Prakash Sharma, coal market analyst at Wood Mackenzie, said in an e-mailed statement. “Leading industrial indicators suggest a sharp deterioration in manufacturing activity - reflected by the decline in global steel production.”

Contract coal prices settled at $285 a ton for the current quarter, 10 percent lower than the previous three months, and after reaching a record following flooding at the start of the year in Australia, the world’s biggest exporter.

The longer-term demand outlook remains strong, which will likely trigger further takeover activity in the sector, Sharma said.

"Demand growth will be led by emerging markets, with Asia accounting for 75% of global metallurgical coal demand by 2030,” he said. “China and India will be key demand drivers, contributing to 60 percent of Asia Pacific’s total import demand.”

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