Drop in coal price short-term phenomenon

By Alexander Ginting

Thailand's largest coal mining company Banpu Plc., predicted that the recent drop of coal price was a short-term phenomenon due to the dumping of low quality coal from the United States into world market.

"The company estimates the drop in the world's coal prices will be for the short term, because as much as 30 million tons of low-quality coal has been sold in the market at low prices. This situation cannot last for long," Banpu Chief Financial Officer Somruedee Chaimongkol said as quoted by the Nation.

Banpu stock has been heavily sold by foreign funds, lowering its foreign shareholding proportion to 50 percent due to the drop in price.

Banpu shares in February hit their lowest level in 30 months, falling 32 perent to 688 points. Yesterday, however, the stock rose Bt6 or 1.2 percent to close at Bt470.

"Banpu's major export market is the Asia-Pacific region, where demand for high-quality coal grows 5 percent annually," she said.

She said that the average price of coal this year was expected to be in line with the firm's forecast of US$97 per ton.

Banpu targets coal production capacity next year of 30 million tons from Indonesia and 17 million tons from Australia. In 2014, it expects to produce 62 million tons in Indonesia and 18 million tons in Australia.

Editing by dianto P. Simamora