RE: China Spurs Coal-Price SurgeSome choice quotes from the February 12th Wall Street Journal article:
Thermal coal prices at Australia's Newcastle port, an Asian price benchmark, finished at $125 a metric ton Monday, according to the globalCOAL international trading platform. That was up 34% since Jan. 25 and up 143% from January 2007.
On Monday, Central Appalachian coal futures on the New York Mercantile Exchange for delivery in March stood at $78.25 per U.S. ton. That's double its price at the start of 2007 despite weak domestic demand and above-average stockpiles due to a mild U.S. winter.
Some experts say coal prices could remain high or even keep climbing through 2009 or beyond, weighing on the already-slowing world economy. Even though coal is a leading source of atmosphere-warming greenhouse gases, its share of the world's energy diet is increasing -- which could help keep its price up in a recession. Although the use of cleaner-burning alternative fuels is on the rise, fast-growing energy consumption is expected to underpin coal demand. Still a relatively cheap -- and abundant -- alternative to oil, coal is sought in rapidly industrializing nations such as Brazil, India and Vietnam as well as China.
The demand for steel in developing countries has put coking coal used for steel at historic highs, as well as the thermal coal used for power. New coal-fired electric plants under construction in the U.S. also should add 50 million tons of new coal demand a year, about a 5% increase above current demand, say natural-resources portfolio managers at U.S. Global Investors.
Coal was assumed by many in the energy industry to be immune to worries about the stability of supply that have helped push oil to record highs. Coal reserves are more evenly distributed around the world, and most of the world's coal is consumed where it's mined. Coal prices enjoyed a bull run in 2004 and 2005, but today's prices are higher and are causing more concern, as the possibility of a global recession looms and oil trades at around $90 per barrel.