Coal From Richards Bay at 8-Week High on Expected Asian Buying

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

15 May 2008

Coal for shipment from South Africa's Richards Bay, site of the world's largest export terminal for the fuel, rose to an eight-week high on expectations that demand from consumers in the Far East will accelerate. Coal supplies to Asia are curbed because of Chinese export cuts and bottlenecks in Australia. Storms in both countries pushed prices to a record earlier this year. PT Timah and PTC India Ltd. said yesterday they're seeking stakes in Indonesian coal mines. Owning mines can secure supplies of the fuel and allow investors to benefit from rising prices.
``There are expectations coal from Richards Bay will go to the Far East and not just India,'' John Howland, an analyst at Petersfield, England-based McCloskey Group Ltd., said by phone. ``It's building up over a period of time.''
India has led rising Asian demand for coal from Richards Bay, Europe's biggest source of the fuel burned for power. Port officials expected a 30-fold rise in sales to the country last year. Indian domestic supplies lag behind demand which has risen in an economy that has grown more than 8 percent annually since 2003.
Export prices at Richards Bay advanced $1.45, or 1.3 percent, to an average of $113.05 a metric ton in the week ended May 9, according to McCloskey. The data also showed that prices at Newcastle, Australia, an Asian benchmark, rose 2.7 percent to $132.50 a ton.
The Baltic Dry Index, a measure of shipping commodities, had a fifth consecutive weekly gain on May 9, driven by demand to haul loads of coal, iron ore and fertilizer from Atlantic ports. The price of coal to northwest Europe rose $4.25, or 2.9 percent, to a record $150.80 a ton, according to McCloskey. Freight can account for as much as half the price of delivered coal.

Source: Bloomberg