Growing confidence in Chinese coal demand

FIFTY-one per cent of the audience attending the coal market session of the recent Coaltrans conference in London expect next year’s coking coal benchmark to reach $US175 a tonne on the back of growing Chinese exports.

Blair Price

The $175/t prediction is 36% higher than the premium coking coal benchmark set this year.

In a commodities report, Macquarie said China’s coking coal imports for the first nine months of 2009 reached 25.9 million tonnes and total metallurgical coal imports were probably more than 29Mt.

While China imported less than 7Mt of coking coal last year, Macquarie found that 66% of the polled delegates expected the country would import more than 20Mt of coking coal in 2010 and 43% of respondents anticipated more than 30Mt of imports.

Looking further ahead, 70% of respondents to Macquarie’s poll expect China will import more than 30Mt of coking coal in 2015 and 50% forecast it could be more than 50Mt.

The investment bank said leading coking coal importer Japan had imported around 54Mt in the last two years.

Macquarie said spot prices for the commodity from Australia were currently around $165-170/t, while US producers were selling at $120-145/t.

Not as optimistic as most of the respondents, the bank forecast next year’s coking coal benchmark to be $160/t.

For pulverised coal injection coal, Macquarie said 54% of the polled delegates expected contracts to settle at $110/t or more.

Interestingly, the delegates were less positive than both Macquarie and the World Steel Association on global steel production in 2010.

Macquarie is expecting global steel production to grow 10% next year, WSA has forecast 9.2% while 68% of the respondents felt it would grow by less than 5%.

More than 1000 coal industry delegates attended the conference and Macquarie chaired the coal market session.

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