Coal-Price Forecast Raised at Merrill on China, India Demand

Kalimantan Coal
By Ben Sharples
Aug. 7 (Bloomberg) — Bank of America Corp.’s Merrill Lynch & Co. unit increased its price forecast for Asian power-station coal because of higher demand from India and China, the second-largest energy-consuming nation.
Merrill raised its projection for the benchmark coal burned by Japanese utilities in the year ending March 31, 2011, to $85 a metric ton from $80, analysts wrote in a note to clients dated yesterday. Goldman Sachs JBWere Pty. last month increased its forecast to $80 from $75 for the same period.
“Surprise strong buying by utilities in India and China” is driving thermal coal demand, Merrill analysts led by Sydney- based Stuart Howe said in the note. Prices at Australia’s Newcastle port, an Asian benchmark, have climbed 27 percent since the end of March and were at $76.58 a ton in the week ended July 31, according to the globalCOAL NEWC Index.
Power-station coal prices at Newcastle are rising on expectations that China will import more of the fuel, emerging demand growth in India, and improved economic conditions as credit markets recover, Merrill said.
Australian and Indonesian coal output have the biggest influence over the trade supply outlook, Merrill said. Rising production costs, declining exploration and development success, and rain in Indonesia suggest “supply growth is now limited,” Merrill said.
To contact the reporter on this story: Ben Sharples in Melbourne at Last Updated: August 6, 2009 23:01 EDT
Weekly Index
RB Index
10-Jul-09 60.69
17-Jul-09 64.08
24-Jul-09 60.67
31-Jul-09 62.40
07-Aug-09 64.73
NEWC Index
10-Jul-09 71.63
17-Jul-09 76.23
24-Jul-09 78.04
31-Jul-09 76.58
07-Aug-09 75.96
Des ARA Index
10-Jul-09 66.01
17-Jul-09 69.98
24-Jul-09 67.23
31-Jul-09 67.70
07-Aug-09 70.49

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