Indonesian coal contract prices may beat forecasts: Report
Friday, February 3 2006 - 12:57 AM WIB
The national average export price may be at least US$45 a metric ton this year, Indonesian Mining Association Chairman Jeffrey Mulyono said recently.
Producers had expected prices currently under negotiation to slump to about $40 from last year?s record of about $53, he said.
Asian spot prices rose to a five-month high last week on increased demand from Japan, which had its coldest December in 20 years, and rainfall that slowed coal transportation by road and railway in Southeast Asia. Rising spot prices may benefit Xstrata Plc and PT Bumi Resources who are locked in talks with power stations in Japan to set 2006 contract prices.
?Until two weeks ago, no one thought the average contract price would go much higher than $40, but things are picking up again as buyers are trying to secure contracts for this year,? said Mulyono, who is also the commissioner of Indonesian coal miner PT Berau Coal, in an interview in Jakarta.
PT Bumi Resources, PT Tambang Batubara Bukit Asam are among Indonesian miners that doubled exports since 2000 to benefit from higher prices, prompting concern about a glut in 2006.
Indonesian miners may increase exports of coal by 5 percent this year, the slowest pace in five years, curbing overseas sales to meet domestic demand, T. Soedjoko, executive director of the Indonesian Coal Mining Association, said on Jan. 23 at a conference in Singapore. Exports had jumped 18 percent in 2005.
?Mining costs in Indonesia have also risen quite a bit, particularly diesel costs, and that would also have an impact on production,? Clyde Henderson, managing director of the Pacific Rims at research company Hill & Associates Inc., said by phone in Sydney.
Thermal coal supplies from Australia, the world?s second- largest exporter, also continue to be constrained by limited port capacities, said Henderson.
Australian coal exports may rise 1.7 percent this year to 110.5 million tons, similar to the 1.6 percent gain in 2005, according to the Australian Bureau of Agricultural and Resource Economics.
Predictions of more than $40 a ton for annual thermal coal sales contracts this year are ?encouraging,? Peter Lye, coordinating manager marketing at Rio Tinto Coal
Annual prices are rising with each new sales contract, Indonesian producers said. Bumi, the country?s biggest coal exporter, sold 21 million tons at an average of $40 a ton for delivery this year, including a more recent agreement at $42 a ton to a Japanese buyer, Peter Tabalujan, head of investor relations for Bumi, said by telephone in Jakarta last week.
State-controlled PT Tambang Batubara Bukit Asam has signed contracts for coal delivery this year at between $42 a metric ton and $48 a metric ton, Corporate Secretary Milawarma said in an interview from Jakarta on Jan. 26.
PT Timah, a state-controlled tin miner and refiner, last month sold coal at $43 a ton, said Lily Harlina, the head of marketing operations at trading arm PT Timah Investasi Mineral. Timah expects prices to average $43 a ton in 2006, Harlina said in an interview in Singapore Jan. 26.
Indonesian coal is no longer cheap this year because rising costs and a percent export tax introduced in January, Mark Earley, executive director of minerals? industry consultant Barlow Jonker Pty, said in Singapore recently. (*)