REUTERS's COAL POLL - Coal prices seen firmer but volatile in 2011

Thursday February 10, 2011 04:27:15 AM GMT
COAL-POLL
* Poll sees higher prices but even more volatility
* China imports may cool in Q2; seen strong for whole year
* Economic growth to boost coal demand worldwide
By Jackie CowhigLONDON,

Feb9,2011 (Reuters) - Coal prices still have potential to rise in 2011 despite recent sharp gains and volatility, analysts polled by Reuters said.The forecasts for average 2011 coal prices given by 22 analysts and industry players polled by Reuters in February were $30-37 a tonne higher than predictions given in January last year but only slightly higher than current values.The forecasts were for the three main physical benchmarks -- thermal coal delivered into Europe and free on board (FOB) South African and Australian ports.

The median forecast for coal delivered in Amsterdam-Rotterdam-Antwerp (DES ARA) in 2011 was $121.00 a tonne, up from $90.00 forecast in January last year. DES ARA prices on average for 2011 are currently around $115.00.
For South Africa's Richards Bay the median forecast was $115.00 a tonne FOB, compared to $85 last year and prices now of $115 while for Australia's Newcastle the median was $126.00, up from $89 last year and compared to spot values of around $123.
For a Table of the full forecast details see.

ASIA DEMAND CONTINUES TO SURGE
A boom in imported thermal coal demand across Asia led by China and India is set to continue for the next several years and will lend further strength to prices.
Although China and India are the biggest importers by far there are several other countries which have emerged as substantial buyers including South Korea, Taiwan and Malaysia and these will absorb increasing quantities of long-haul coal from South Africa and Colombia.
"Once again we rely on Asian demand to be the driver for coal prices but if there were no issues on the supply side, demand from Asia would produce only a slower, steady rise in prices," said Emmanuel Fages at Societe Generale in Paris.

"This time last year some people were expecting China to import 200 million tonnes and while the figure was less, around 140 million, it was still a huge quantity and we expect a similar amount for this year," the analyst said.
China's rapid entry and withdrawal from the import market significantly contributed to the price volatility seen last year and this is also likely to continue in 2011, analysts said.
Most analysts polled agreed that the overall trend was upwards but a series of price shocks -- spikes and falls -- are likely as the market reacts to supply disruptions and the sudden appearance and disappearance of Chinese spot buying

"I think API2 prices will average at least $120 and could end the year above $125, on a combination of Asian demand growth and further supply shocks causing price spikes through the year," said Fages.
Moves in other energy markets will also cause sharp price movements in coal, analysts said. Coal has become more responsive to moves in other markets such as oil and to news which moves energy markets in general, such as the Egyptian unrest which helped propel oil prices to over $100.
"The key thing is that supply might be under less pressure in 2011 than in recent months but we should not underestimate the potential impact of everything which is going on in the Middle East," said Charles Kernot at Evolution Securities.
"If oil goes up, coal will perform pretty well," he said.

ECONOMIC RECOVERY
Coal demand and prices will also be boosted by the general economic recovery in Europe and North America and continued growth in Asia despite China applying the brakes on its speedy growth by raising interest rates, analysts said.
"The improving economic background in Europe and North America should help support coal prices because demand will start to increase. Preliminary economic numbers published recently were looking pretty good," Kernot said.

Last year saw almost every major coal exporting country faced weather-linked supply disruptions and a similar pattern cannot be ruled out for 2011, analysts said.
"Coal has become very volatile and prone to price spikes due to supply disruptions -- which is what happened after the Australian floods and in fact prices now are higher than they were just before the floods," said Fages.

Although some analysts cautioned that weak Chinese demand in Q2 might pull prices down, the overall scenario is for price growth over the whole year.
"We continue to view coal favourably. Even beyond the Australian floods, demand remains extremely strong, with most of the exporting nations facing infrastructural issues," said Barclays Capital's Amrita Sen. (Editing by James Jukwey,sourced:Thomson Reuters)

Russia's Evraz sees '11 EBITDA $3.0-$3.6 bln

Thu Feb 3, 2011 11:00 am GMT
MOSCOW(Reuters)

Evraz (HK1q.L: Quote), Russia's second largest steelmaker, expects its core earnings to reach $3.0-$3.6 billion this year, chief financial officer Giacomo Baizini said on Thursday.
"Analysts forecast our EBITDA between $3.0-$3.6 billion in 2011, and I have no reason to say that we will not achieve this," Baizini said at the Troika Dialog forum in Moscow.
Evraz, part-owned by billionaire Roman Abramovich, has not released earnings before interest, taxation, depreciation and amortisation (EBITDA) for 2010.
It is scheduled to report its 2010 results on March 31.
The executive also said 2011 capital expenditures will reach about $1.2 billion compared to $950 million last year.
(Reporting by Anastasia Teterevleva, writing by Alfred Kueppers, sourced: reuters)

Japan steel body: to eye Russia, Mongolia for coal

Wednesday Jan 26, 2011
TOKYO, Jan 26 (Reuters)
Japanese steelmakers will aim to diversify their procurement of coal to Russia and Mongolia but for now must keep relying on Australia for supply, the head of Japan's steel industry association said on Wednesday.
Eiji Hayashida, chairman of the Japan Iron and Steel Federation and president of JFE Steel Corp (5411.T: Quote), also said that he did not expect the current level of flooding in Australia to hurt JFE's production.
(soucred:reuters)

Orissa allows 6 iron ore mines to resume operations

Tuesday, 25 Jan 2011

India's top iron ore producing state Orissa said that it has allowed six mines to restart, three days after they were ordered to shut down in a crackdown on illegal mining.
The six were among 23 mines closed down on Friday pending submission of paperwork, adding to a total of more than 300 mines in Orissa shuttered since July 2009 as India tightens mining regulations.
Mr UC Jena Orissa's deputy director for mines told Reuters that production lost at the six mines was about 174,000 tonnes since Friday. All of the 23 mines have lost about 450,000 tonnes in output since being shut down on Friday, he added, amounting to a fraction of Orissa's annual output of about 75 million tonnes.
The shutdown last week was a procedural step and not related to a ban on iron ore exports the state wants to propose to boost local supplies.
Orissa is the third largest exporter of the steelmaking raw material in the country, the world's No. 3 supplier. India sells about half of its annual output of more than 200 million tonnes to top iron ore importer and steel producer China.
Tight supply of iron ore from India, largely due to a ban on exports from its Karnataka since July, had helped push spot prices to near record highs.
Mr Jena said that "I hope some more operators will submit their valid documents. If they submit we will issue permissions adding that the documents being sought include forest clearances and mining leases.”
(Sourced from Reuters)

Chinese iron ore imports from Brazil and India fall sharply in 2010

Monday, 24 Jan 2011

Reuters quoted according to data issued by customs that Chinese imports of iron ore from Brazil and India fell sharply during 2010 while Australian shipments inched up slightly over the year.

Shipments from India fell 9.98% to 96.59 million tonnes in 2010, and Brazilian deliveries declined by 9.09% to 130.86 million tonnes compared to a year earlier.
Imports from Australia reached 265.33 million tonnes up by 1.36%YoY.

China stung by its dependence on the three dominant global supplier countries, vowed early last year to diversify its sources of iron ore. Australia, Brazil and India provided 79.7% of China total iron ore imports over 2010 down from 81.5% in 2009 and much of the gap was met by increasing shipments from countries such as Iran, Ukraine and Venezuela.
(Sourced from Reuters)

Australia govt: 20 pct of qtr coal exports lost to floods

* Gov't forecasts 20pct of Australia's quarterly coal exports lost to floods
* Around 7 pct of cotton plantings also lost
* Cockatoo, Aquila make headway at coal mines leave force majeure in place (Wraps ABARES data, Rio Tinto, Aquila)
By James Regan

SYDNEY, Jan 21 (Reuters) - Australia's devastating floods, which shut mines and damaged rail lines, could cut coal exports by around 15 million tonnes, or 20 percent this quarter, even as collieries show signs of recovery, the government's commodities forecasting agency said on Friday.
Coal ports in hardest-hit Queensland state escaped severe damage, but are still operating well under capacity as a result of lower coal receivals, Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) said.
ABARES estimates flooding due to monsoon rains that started in November could lower coal export earnings by A$2.0 - $2.5 billion ($1.97-billion-2.47 billion) during the quarter to March 31.
"Coal production at affected mines has been reduced because of a number of factors, including flooded pits and difficulties in removing the water, and a lack of access to mine sites because of flooded roads," it said.
Australia was forecast to export 160 million tonnes of metallurgical coal and 158 million tonnes of thermal coal in fiscal 2011, according to ABARES.
Cockatoo Coal and Aquila Resources on Friday partially resumed operations in hardest Queensland state as floodwaters continued to recede.
But in the aftermath of one of Australia's worst natural disasters on record, mining companies say operations are still far from normal: Vital rail corridors linking mines with export terminals are only slowing being reactivated and force majeure -- a legal let-out enabling miners to break sales contracts without penalty -- remain in place across Queensland.

COAL OPERATIONS
Aquila, which mines 2.8 million tonnes a year of metallurgical and thermal coals from its Issac Plains mine in 50-50 partnership with Brazil's Vale warned it would still take some time to resume full operations. Cockatoo Coal said mining at its Baralaba operations would not start before February.
The Baralaba mine suffered some of the worst damage during the flooding after a levy protecting the lode collapsed sending a torrent of water into the pit.
Flooding at other mines -- most concentrated in the inland Bowen Basin -- was restricted to rainwater.
"Whilst all equipment is in working order, resumption of full production rates will take some time while dewatering of the site is completed, Cockatoo said.
It only expects to restart mining in February once pit dewatering provides improved access.
"A phased program of dewatering/mining is then expected to continue for several weeks as the mine returns to planned production capacity (about 150,000 tonnes per quarter)," Cockatoo said.
Suppliers of pumping equipment needed to empty water from the mines have said they will be hard-pressed to meet demand and environmentalists are concerned the water may pose health risks.
The flooding has been blamed on rains triggered by a La Nina Pacific weather pattern that has devastated huge areas of the eastern seaboard.
Rio Tinto RIO.L> this week said its Queensland coal mines were operational but still constrained and left its force majeure declaration in place. .

BHP Billiton , the world's largest supplier of sea-borne hard coking coal via a joint venture with Japan's Mitsubishi Corp , is bracing for lower production over the next six months in the aftermath of the flooding, which trimmed December quarter output by a third.
The flooding has driven contract prices for coking coal as high as $225 per tonne for the first quarter of 2011, compared to $209 per tonne in the fourth quarter of 2010.
Spot prices have shot up to more than $350 per tonne and consultants Wood Mackenzie said prices could reach $500.
This will mean higher second-quarter contract prices, based on average daily spot prices over the previous three months.
But a quicker-than-expected return to production would likely end the upward trajectory in coal prices, according to Patersons Securities analyst Andrew Harrington.
"This happened after flooding in 2007/08 caused the price to go up and then fall back," Harrington said.

WHEAT QUALITY DOWN, COTTON HIT
ABARES also estimated flooding cut agricultural production by at least A$500 million to A$600 million in 2010/11.
It said the winter harvest, including wheat, barley and canola, in most of the flood-affected regions was either complete or near completion before the recent flooding.
But a wet harvest means Australia, usually the world's fourth biggest wheat exporter, could see more than 10 million tonnes of wheat downgraded in quality to low quality milling wheat or feed wheat. A wet growing season means a near record 26 million tonnes of the grain could be harvested nationally.
ABARES also estimated that around seven percent of Australian cotton plantings, valued at A$150 million in 2010-11 was destroyed and a further 2 percent were at risk if the crops did not have the opportunity to dry out.
The 2010/11 Australian cotton harvest could be 3.95 million bales, 8 percent below an earlier estimate but the July to June year harvest would still be a record, exceeding the 3.52 million bales harvested in 2001/02, Rabobank said in a report last week. (4.4 bales equals 1 tone)
The wet weather in Queensland has had a limited impact on other mineral and energy commodity production concentred further north of the coalfields
The one notable exception was Rio Tinto declaring force majeure at its Boyne Island aluminium smelter. Force majeure was lifted on Friday after road and rail access to the port of Brisbane was restored .
(Additional reporting by Bruce Hextall and Balazs Koranyi; Editing by Ed Davies, sourced Reuters)

Global steel output rises to record

Fri Jan 21, 2011 6:06pm GMT
* Asia drives steel production growth
* Western economies lag behind Asia
* China share of global production falls
By Silvia Antonioli

LONDON, Jan 21 (Reuters) - Global crude steel production touched a new record in 2010, driven by growth in emerging regions and improving manufacturing in the developed world, although the construction sector remained gloomy.
Global production rose 15 percent to 1.414 billion tonnes in 2010 from 1.327 billion in 2008 and 1.229 billion in 2008, according to data released by the World Steel Association on Friday.
"The production data is better than people could expect in the aftermath of the crisis in 2009," said Anthony de Carvalho, administrator on the steel committee at the Organisation for Economic Co-operation and Development(OECD).
"The economic stimulus programmes (undertaken by governments) indirectly helped the steel industry. But many countries are still below pre-recession levels."
Asia and other developing countries drove the growth and reached record production levels, while output in Western economies lagged behind 2008's levels as growth remained fragile and the construction sector was hit hard, analysts said.
Production in China, the world's largest steel producer, rose 9.3 percent to 626.7 million tonnes on the previous year, but its share of global production fell to 44.3 percent from 46.7 percent in 2009.
Analysts said China's growth was strong but hampered by electricity cuts in the last part of 2010, analysts said.
"China had problems trying to meet environmental requirements," said Peter Fish, managing director at MEPS, a steel information provider.
"But the Chinese could not grow 20 or 30 percent like some other countries, because in 2009, when everyone else took a dip, China didn't."
Chinese steel production is expected to grow but at a slower rate in 2011, closer to 5 percent versus 7-8 percent growth in India, Fisher forecast
As China's economy grows, the authorities are likely to turn to monetary policy to contain inflation, and this could affect steel demand, according to analysts.
"We do think that a tighter monetary policy in China will slow down steel consumption and this will start to kick in in the second half of 2011," said Chris Houden, analyst at CRU.
Japan, the world's second-largest steel producer, enjoyed 25.2 percent growth in 2010 to 109.6 million tonnes versus 2009. Its exports have got a boost from growth in neighbouring economies such as China and Korea, according to De Carvalho.
EU and U.S. steel production grew rapidly but from a lower base. Production in the European Union grew by 24.6 percent to 172.9 million tonnes and in the United States by 38.5 percent to 80.6 million.
These countries are still struggling with overcapacity, analysts said.
"(Capacity) utilization is picking up from low levels, but the question is: Will producers keep production low to get price increases?" said UBS analyst Andrew Snowdowne.
While steel production in emerging economies will continue to grow to record levels, it may take developed countries a few more years to go back to pre-crisis levels given the fragile state of their economies, analysts said.
(Reporting by Silvia Antonioli; editing by Jane Baird, reuters.com@reuters.net))

Rio and Aquila resume operations after Queensland floods

Saturday, 22 Jan 2011
Reuters reported that miners Rio Tinto and Aquila Resources have resumed some operations in Australia's flood ravaged Queensland state as waters receded and the region's vital mining and metals sector slowly returned to work.
Rio Tinto terminated force majeure at its Boyne Island aluminium smelter as it could resume transportation while Aquila restarted production at its Isaac Plains coal mine, a joint venture with Brazil's Vale.
But Queensland's coal industry, which suffered losses of over USD 2 billion according to some estimates, is still far from normal and Aquila warned it would still take some time to resume full operations while Cockatoo Coal said mining at its Baralaba operations would not start before February 2011.
Aquila said that "Whilst all equipment is in working order, resumption of full production rates will take some time while dewatering of the site is completed. Force Majeure remains in place on a number of sales contracts."
Australia accounts for around two-thirds of the world's coking coal exports and Queensland share is around 90 percent of that figures.
Gladstone Port, Queensland's second largest coal export port, earlier this week said it would take until the end of March 2011 for exports to return to normal while mining services companies said it could take three to six months to pump out all the water in mining pits.
(Sourced from www.reuters.com)