According to Scotiabank latest Commodity Price Index the world benchmark price for steelmaking coal slipped from its record high for the current quarter but that likely won’t hurt producers too deeply.
Ms Patricia Mohr Scotiabank commodity expert said prices and largely set by contract fell to USD 315 per tonne from USD 330 in the previous quarter largely because of the recovery of production at Australian mines that were flooded out by La Nina related winter storms.
She added that “But that USD 315 is still higher than any price other than the previous quarter. Three-hundred and fifteen dollars is very high. She added that it was China near record high steel production earlier this year that held coal prices up.”
In the long run however, Ms Mohr expects Chinese demand to keep metallurgical coal at relatively high prices. She noted that new coal shipments from Mongolia made that country China biggest supplier in the first half of 2011 but that was largely because of the steep decline in shipments from Queensland in Australia which have not fully recovered.
For the balance of 2011, Ms Mohr expects the top price for metallurgical coal to average USD 298 which is still lucrative and offers support to the expansion ambitions of Canadian companies such as Teck proposed reopening of its Quintette mine in northeastern British Columbia.
She said “It all depends on China and its economic growth continuing to move ahead at a reasonable pace.”
Japan saw some of its steel production interrupted by the March 21 earthquake and tsunami that devastated a large swath of North Eastern Japan. However, China demand would have more than offset the reduction in Japan’s production.
Coking coal is mixed with iron ore and burned in blast furnaces during the steel smelting process. However, the interruption of steel production capacity in Japan is still weighing on BC Teck Resources Ltd which cited the deferral of shipments by Japanese customers as the reason for a reduction in its estimate for output in the second quarter of 2011.
Ms Patricia Mohr Scotiabank commodity expert said prices and largely set by contract fell to USD 315 per tonne from USD 330 in the previous quarter largely because of the recovery of production at Australian mines that were flooded out by La Nina related winter storms.
She added that “But that USD 315 is still higher than any price other than the previous quarter. Three-hundred and fifteen dollars is very high. She added that it was China near record high steel production earlier this year that held coal prices up.”
In the long run however, Ms Mohr expects Chinese demand to keep metallurgical coal at relatively high prices. She noted that new coal shipments from Mongolia made that country China biggest supplier in the first half of 2011 but that was largely because of the steep decline in shipments from Queensland in Australia which have not fully recovered.
For the balance of 2011, Ms Mohr expects the top price for metallurgical coal to average USD 298 which is still lucrative and offers support to the expansion ambitions of Canadian companies such as Teck proposed reopening of its Quintette mine in northeastern British Columbia.
She said “It all depends on China and its economic growth continuing to move ahead at a reasonable pace.”
Japan saw some of its steel production interrupted by the March 21 earthquake and tsunami that devastated a large swath of North Eastern Japan. However, China demand would have more than offset the reduction in Japan’s production.
Coking coal is mixed with iron ore and burned in blast furnaces during the steel smelting process. However, the interruption of steel production capacity in Japan is still weighing on BC Teck Resources Ltd which cited the deferral of shipments by Japanese customers as the reason for a reduction in its estimate for output in the second quarter of 2011.
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