Forces including increased Chinese power demand, unusually wet weather in India and strike action in Australia were noted as influencing agents on suffering coal prices in recent quarters and an almost inevitable recovery in 2013.
Core Consultants managing director Lara Smith said that the various operational curtailments from global coal heavyweights this year were too severe a reaction to a market primed to recover lost ground.
Smith credited weak coal markets in Q3 2012 to Asia’s wettest rain season in seven years, and booming Indian and Chinese hydroelectric power at the expense of thermal plants.
“Now that the seasons have changed, we should see a turnaround and an increased use of coal-burning at the expense of hydro power,” she said.
“So we should see an additional 8 million tonnes of coal utilisation in 2012 compared to 2011 as the power stations start to restock as soon as the monsoon period ends.”
Core Consultants anticipates thermal prices will reach $US105 per tonne by the end of Q4 2012.
Metallurgical coal markets were also predicted to improve, due to reduction in Chinese inventory, continued Japanese reconstruction efforts after the Fukushima disaster, and the fact that current prices are below Australian producers’ costs.
Smith tipped met coal prices to touch $200 per tonne in Q1 next year and attain an average $228t for the whole of 2013, compared to 2012’s average of $223t.
This estimate was paralleled with an expectation that Anglo American, BHP Billiton and Rio Tinto would deliver 5.3Mt in 2014 from Australian operations in addition to a further 360,000t from Rio’s emerging Benga mine in Mozambique.
The Steel Index director Tim Hard also confirmed projections that Chinese iron ore and steel demand would increase in the short-term as both met and thermal coal sentiment at the Indaba took on a bullish tone.
The three-day conference at Singapore’s Marina Bay Sands convention centre represents an Asia-focused expansion of the successful Investing in African Mining Indaba held annually in South Africa.