Coking coal rates high

HARD coking coal has made the top 10 picks for 2010 by Canada’s Scotiabank as the bulk commodity once again commands the attention it received before the global financial crisis.

Angie Tomlinson

Scotiabank vice-president and economics and commodity market specialist Patricia Mohr said the annual contract price for western Canada's premium-grade hard coking coal sold to Japanese and other Asian steelmakers was expected to climb 32% from $US128 per tonne to at least $169 in Japanese fiscal year 2010.

“International supplies of premium-grade hard coking coal are tightening, with stepped-up demand in China and Japan and port and rail constraints in Australia," she said.

Next year, commodity prices should continue to move higher alongside the ongoing strength in China's economy, with GDP expected to advance by 9.5%, up from this year's estimated 8.3%; some restocking of basic materials across the G7; and continued interest by investors in commodities as an asset class, with interest shifting from passive, commodity-index investing to more active strategies, using hedge funds.

"While this year's gains in commodity prices have been centred in exchange-traded commodities, the spring of 2010 should see increases in negotiated prices under annual contracts for coking coal and iron ore, and potash prices should start to rebound," Mohr said.

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