Goldman Sachs - Asian Coal Costs May Rise By 22% In 2008 - Bloomberg

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Sept. 14 (Bloomberg) -- Japanese utilities may have to pay 22 percent more for Australian coal next year after South Korean buyers locked in supplies seven months early, anticipating a shortage, Goldman Sachs JBWere Pty. said.

Prices of thermal coal may jump to $68 a metric ton, the Melbourne-based securities firm said in a report yesterday, increasing an earlier forecast by 10 percent. Korean utilities ordered one-quarter of their planned 2008 purchases from Australia at about $66, before contracts start April 1, it said, citing McCloskey's Coal Report

The ``unprecedented'' Korean purchases signal concern among buyers about availability next year, Goldman said. Asian benchmarks for thermal coal sold under annual contracts are poised to rise to a record for a second year after China became a net importer of the fuel for the first time. Contract prices were settled at a record $56 for the year that started April 1.

``With spot thermal coal prices ex-Newcastle currently around $67 a ton and the Asia-Pacific seaborne market more likely to tighten than ease over the next few months, we believe the major Australian coal suppliers have already established a floor price around $66-$68 a ton for next year's contract with the Japanese power utilities,'' Goldman analysts Malcolm Southwood and Paul Gray said in the report.

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http://www.bloomberg.com/apps/news?pid=20601080&sid=a8YMbcnrxygs&refer=asia