US coal may oust Australian in Asia trade - Mr Ron Beveridge

Monday, 13 Jun 2011

Reuter citing Mr Ron Beveridge of Ronly Bulk Trading as saying that Australian coking coal producers risk losing Asian market share to US and Canadian suppliers because of the Australians' quarterly prices which are seen as inflated.

He said that the shift to quarterly pricing for coking coal driven by major producers including BHP Billition, Xstrata and Anglo American has been unpopular and fiercely resisted by many Asian steel mills

He added that "Never a day goes by you don't hear of somebody who's had a fight with a major Australian coal producer and told them what they can do with their coal and their prices.”

Mr Beveridge said "USD 315 a tonne was recently paid by a European mill and rejected by Asian buyers as too high. Japanese, Korean and Indian coking coal buyers were struggling to diversify from Australian coal to find cheaper supply and avoid quarterly pricing.”

Mr Beveridge said the disastrous floods in Australia Queensland area at the start of the year slashed coal exports and prompted Asian mills to scour the globe for alternative supply US, Canadian, Russian and Mongolian suppliers moved to fill the supply gap to Europe and Asia and have not insisted on quarterly prices.

He said that "We're seeing a big shift from Australian to US coal and I sense there could be a head-on clash in the next two or three months as the Australians are losing tonnage. The surge in prices which followed the Queensland floods prompted the Chinese to pull out and take domestic and Mongolian coal instead of Australian

He added that once the Australian mines reach full output again at the end of August, producers there may find themselves with tonnes which are hard to sell, particularly if they still insist on quarterly prices.

Mongolia supply surges to China. China still depends on its own vast, domestic coal resources but will import when the magical figure of USD 225 a tonne is reached for coking coal and the arbitrage window opens, Beveridge said. But Mongolia has been eroding Australia share of Chinese imports for the past year, moving coal across the border by truck.

(Sourced from Reuters)