In the first half of 2011, hard coking coal prices are forecast to average around $200/mt, representing a six percent increase on the 2010 average, according to a report released by the Australian Bureau of Agricultural and Resource Economics - Bureau of Rural Sciences (ABARE-BRS). For 2010 as a whole, hard coking coal contract prices will average $191/mt.
In early September, high-quality hard coking coal contract prices for the last quarter of 2010 were settled at $209/mt, a seven percent decline from the third quarter. This price decline mainly reflects slower demand growth from key Asian customers, which was partially offset by lower exports from Australia's Hay Point coal terminal as a result of scheduled maintenance and from the Russian Federation.
According to the ABARE-BRS report, growth in world trade of metallurgical coal, particularly in the Asia-Pacific region, is forecast to increase over the remainder of 2010 and into 2011, with higher exports from Australia and Canada. World trade is forecast to increase by 14 percent to 241 million metric tons in 2010 and by a further eight percent to 260 million metric tons in 2011.
Import demand growth will mainly come from developing Asian economies, particularly China and India. In 2010, imports by China, which increased by 386 percent in 2009, are forecast to rise by a further nine percent to 37 million metric tons. China's imports in 2011 are forecast to increase by a further 19 percent to 44 million metric tons. This forecast strong growth mainly reflects imports delivered to the southern coastal regions being cost competitive against China's domestically produced coal that will be transported from the country's north, and other issues such as infrastructure bottlenecks. Imports are estimated to have accounted for only eight percent of China's metallurgical coal consumption in 2009.
India's imports of metallurgical coal are forecast to increase by 13 percent to 26 million metric tons in 2010 and by a further 15 percent to 30 million metric tons in 2011. Underpinning these increases is forecast growth in India's steel production and limited domestic metallurgical coal supply.
Imports of metallurgical coal by OECD economies have grown during 2010, associated with an increase in steel production. For 2010 as a whole, imports by the Republic of Korea, Japan and the European Union are forecast to increase by 47 percent, 13 percent and 12 percent, respectively. In 2011, imports by these economies are forecast to grow by a further 14 percent, 10 percent and four percent, respectively. Despite this forecast strong growth, import volumes of metallurgical coal in these economies in 2011 will still be similar to or below that achieved in 2008.