Regional Coal: Australia-Japan coal prices may fall by year-end: Report

Australian prices for coal exported to Japanese utilities may fall in the last three months of this year as increased shipments from Indonesia ease concern about supplies, Bloomberg reported Friday.

Prices may also decline as exporters such as Coal & Allied Industries Ltd. ship coal at lower prices under older, long-term contracts. The average export price of thermal coal, burned to produce electricity, to Japan may fall to $40 a ton in the last quarter of the year, 13 percent less than in August.

?Coal prices will still remain high in historic terms,? Clyde Henderson, director of Sydney-based consultancy Energy Economics Pty, said in a telephone interview. ?But, we've got the worst of the supply disruptions behind us, and demand continue to be strong. So the market will move towards equilibrium.?

Australian coal prices rose to a record this year as China limited exports to ensure supply for its own steelmakers and power companies. China is the world's largest coal producer, followed by Australia, India and Indonesia. Global coal demand has risen every year since 1999, according to BP Plc.

Average export prices for thermal coal to Japan from Australia may rise to more than $45 a ton in the first quarter as new contracts are negotiated, Energy Economics said.

Thermal coal contract prices for the year beginning April 1, 2005, may rise 11 percent to $50 a ton, from $45 a ton, Energy Economics said.

Japan's power generation rose for a fifth consecutive month in August from a year earlier, due to increased use of air conditioners and higher demand from industrial customers. Japan is the world's largest buyer of thermal coal, according to Energy Economics. (*)