Rise in coal prices only temporary: ICS

The recent increase in coal prices is only temporary because it is caused by the longer than expected winter rather than due to fundamental factors, according to Indonesia Coal Society.

The director of ICS Singgih Widagdo told Bisnis Indonesia on Wednesday that the surge in the coal prices had yet to reflect the real trend of the oil prices in the international market.

"The increase in the coal price is caused by non-fundamental factors, not because of supply and demand," he was quoted as saying. He said that this year's supply would likely exceed the demand due to increase in coal exports from major coal producers.

According to him, Australia, one of major coal suppliers in the world, is expected to increase its exports by 37 million tons to 261 million tons this year from 237 million tons in 2005.

Although the surge in prices to US$47 per ton last week from US$45 per ton early February was due to non-fundamental factors, it benefited Indonesia because the country had also projected to increase its coal exports by about 17.7 million tons this year. (*)