| Merrill Lynch & Co, has predicted a rise in thermal coal contract prices by 10 per cent next year because of supply shortages. The price rise will boost the profits of Australian miners like BHP Billiton and Rio Tinto Group. |
| Merrill Lynch projected a 10 per cent rise in contract prices for thermal coal, used by power utilities, to $49.50. Earlier estimate had predicted flat prices. At present thermal coal was ruling around $45 per tonne. |
| "A likely surge in power use in China along with capacity constraints may drive thermal coal prices higher, and increased mining activity in the next few months won't be enough to meet the increased demand," Merrill Lynch said in the report. |
| India imported around 10 million tonnes of thermal coal in 2003-04. Conservative estimates have put the rise in import demand to 0.5 million tonnes this year to 10.5 million tonnes. In 2003-04, the total import bill was close to Rs 1500 crore. |
| "Korea Electric Power Corp's agreement few weeks back week to pay record prices this year for thermal coal from China reinforces the view that the thermal coal market is likely to see 'extreme tightness' for at least the rest of 2004 'and probably beyond'," Goldman Sachs said in a separate report some time back. |
| "In Japan, Australia's largest export market, the economy was forecast to grow 3.2 per cent this year. The US economy, Australia's second-biggest trading partner, was expected to grow at 4.5 per cent," said experts. |
| "The Asian economies including India are strong and their demand for electricity is growing which is boosting demand for thermal coal," said sources. |
| "The fact that Chinese power is so great and is growing so quickly means that China's coal industry is struggling to keep up, prompting local suppliers to hold product back from export, while the gap was being filled up by Australia at a price," analysts said. |
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