GSJBW said this week with no evidence of any slowdown in demand from India for coking coal and no quick fix to the logistical bottlenecks afflicting suppliers, it was confident in its “early call”

Predictions for metallurgical coal for 2008 were for prices to rise, rather than fall as previously predicted, as the continuing boom in demand for steel-making raw materials and severe logistical bottlenecks stretched global supply chains to their limits.

GSJBW projected for 2008:

• Hard coking coal: $120 per tonne – 22% above this year’s contract price;
• Low-vol PCI: $80/t – 19% above this year’s contract price;
• Semi-soft coking coal: $70/t – 9% above this year’s contract price; and
• Thermal coal: $56/t – unchanged.

Much of the strength behind coking coal will continue to come from India, with estimates that the country’s imported met coal will rise to 25 million tonnes – making it the third largest importer behind Japan and Europe.

“Our long-term projection is for India (and Brazil) to be increasingly important markets for suppliers of metallurgical coal as integrated steel-making (and hence coke consumption) gravitates towards the BRIC economies and away from the mature and relatively high cost locations of Japan and Europe,” GSJBW analysts said.

For its listed stocks, the group predicted modest earning upgrades for BHP and Rio Tinto, plus significant upside for Centennial if consistent production is achieved, and it upgraded its rating on Macarthur Coal to outperform.