The combination of decreases supply from Australia and increased demand from a renewed Chinese focus on infrastructure is projected to have a particularly significant impact on India, one of Australia’s largest coking coal customers.

China’s official state media outlet Xinhua quoted Ennore Coke director and president Ganesan Natarajan on the likely increase in prices.

“The Chinese stimulus package of $US1 trillion is bound to boost coking coal prices and I feel contract prices will reach the level of at least $US180 a ton for January- March,” he said.

“For October-December, BHP Billiton has fixed the contract deal with Nippon Steel of Japan at $US170 a ton.

“Currently, spot prices of coking coal are lower than the contract prices owing to slump in demand. But gradually, spot prices will close in on the gap with contract prices as demand picks up.”

The report conceded, however, that the market for coking coal could remain bearish as Chinese growth continued to slow and coal stockpiles continued to overrun at Chinese ports.

India accounts for about 20% of all coal exported from Australia.