Google Website Translator Gadget

Sunday, February 19, 2012

Global coking coal market comes face to face with oversupply - Mr McCloskey

Sunday, 19 Feb 2012

The global coking coal market is currently oversupplied and prices are poised for further declines. Despite this, a variety of new projects and expansions will continue to swell global supply for the foreseeable future, although the largest new tonnages will not make their appearance until the next decade. Australia and China remain the keys to supply and demand respectively.

Mr Gerard McCloskey of McCloskey Group said that “There is an oversupply. If Australia comes back to the sort of levels it was doing in the first half of 2010, another 30 million tonnes will come onto a very balanced market.”

He said that prices will fall, but will remain at pretty decent levels that are likely to be well above producer costs.

Mr McCloskey said that “Whatever happens to prices in next quarter, you’ll have seen the longest period with coking coal above USD 200 eight quarters.”

He added “During that time, price volatility has been extraordinary, with prices hitting as much as USD 330 in the second quarter of 2011, before falling back to USD 235 in the current quarter.”

Mr McCloskey predicted that “There will be a correction of prices down towards USD 200. It’s a great price. Until two years ago we had not had prices above USD 200 except for one brief period in 2008.”

Mr McCloskey said that additional supply meanwhile is coming from Australia, which is just getting back to normality following last year’s extensive flooding in Queensland, the country’s major coal producing region. Australian producers are in the process of adding another 30 million tonnes to a hard coking coal market that is probably only about 140 million tones.


No comments: