RE: TSX Bloomberg reported that coking coal prices are set to rebound as early as July from four straight quarterly declines as China and India seek raw material overseas to fire new steel production in the world fastest growing major economies.
Contract prices that fell to USD 206 per tonne for the quarter ending June 30 may rebound to average USD 225 a ton this financial year, based on the mean estimate of 10 analysts, steelmakers and mining companies surveyed by Bloomberg. Contracts of coking coal, a key ingredient used to make steel, peaked at USD 330 in the June quarter last year.
According to market researcher Custeel.com China, the largest steel producer is leading demand growth forecast at almost 10% this year. It started about 10 new blast furnaces in the past six months, lifting output to a record in March. India, the third biggest steelmaker, is set to boost capacity a third to more than 100 million tons by March in a five year USD 1 trillion plan to build roads, bridges and railway networks.
Mr Natalie Robertson an analyst at ANZ Banking Group Ltd in Melbourne said “Rising Indian imports will have a positive impact on coking coal. “The near-term prices will more closely track development in China.”
He said that China may surpass Japan as the biggest coking coal importer by 2015 a position it may eventually relinquish to India.
China is encouraging global use of the yuan and allowing more overseas investors in its local capital markets as Premier Mr Wen Jiabao seeks to shift the focus of economic growth to domestic demand from slowing export industries. The government broadened the yuan trading band against the dollar to 1% from its daily reference rate on April 16, having held the limit at 0.5% since May 2007.