World coal prices slip in run-up to Christmas

World coal markets saw prices fall on 16 December. Coal at Newcastle, Australia, noted a lower price of US$110.28 (against US$111.53/t the previous week) while at Richards Bay, coal traded at US$101.95, down from US$103.47, according to the GlobalCoal Weekly Index.

The DES ARA contract shaved off US$1.11 to US$110.61. Weaker oil, the euro and equities as well as the absence of fresh spot trade is having a downward effect on European coal prices.

Coal prices in the US have shown a mixture of stability and decline. Illinois Basin product (11,800Btu/5.0 SO2) and Uinta Basin coal (11,700Btu/0.8 SO2) prices remained stable at US$49.00/st and US$41.00/st, respectively, on 16 December. Appalachian and Powder River output all noted a drop in price. Low-sulphur Powder River product (8800Btu) slipped from uS$12.85 to US$12.60. Central and Northern Appalachian coal fell from US$76.85 to US$75.25 and from US$76.90 to US$73.00, respectively.
Activity in the coal market has been slow throughout 4Q2011 with key spot buyers such as China and India largely sidelined and demand from European utilities or traders.

However, in a report released yesterday, the International Energy Agency (IEA) said world coal prices would be pushed up over the next five years as China and other emerging economies depend on the black gold to develop their economies.

The IEA estimates average coal demand will grow by 600,000 tons a day over the next five years,” said Maria van der Hoeven, executive director of the IEA. “What happens in China over the medium term may impact the prices for electricity that consumers everywhere will have to pay.”

Nevertheless experts said that domestic coal prices will fall next year. “The international coal price may rise, but domestically the coal price will be lower due to the government’s policy of limiting coal prices next year,” Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times yesterday.