Australia coal output set to expand in Asia market

Australia coal output set to expand in Asia market

SYDNEY (Reuter): Australian coal producers are gearing up for a massive increase in supply to the Asian export market despite Japanese buyers' resentment over current year price increases.

An international coal conference held here forecast that total Australian coal production would leap by 81.3 million tons by the year 2000, up from the 1994/95 output of a total 476.2 million tons of all types of coal.

The forecast was presented by McCloskey Coal Information Services Ltd. from data gathered from a survey of intentions by the Australian coal industry.

Australia's big rise in output, set to begin in calendar 1996 with a forecast increase of 22.15 million tons of all coal types, is being generated by surging demand from the Asian power industry and from continued demand by steel, according to conference papers.

The conference was held as the annual round of price negotiations was about to open in Tokyo between Japanese steel and power industries and the Australian coal industry.

Ian McPhee, marketing manager for leading producer Coal & Allied Industries Ltd. told the conference Japanese buyers held a "very real resentment" over 1995/96 price rises.

Colin Gubbins, manager Indonesia of PowerGen International, a branch of British-based PowerGen Plc., predicted a price rise of between US$3.00 and US$3.50 a ton for Australian hard coking coal exports to Asia for the Japanese 1996/97 fiscal year, which begins April 1.

He expected price increases in a much softer steaming coal market of US$1.50 to US$2.00 a ton.

In negotiations which opened a year ago, Australia ended several years of falls in export prices to Japan by negotiating 1995/96 price rises of 17.2 percent to US$40.35 a ton for steaming coal and of 12.4 percent to US$51.15 a ton for coking coal.

Demand

The conference was presented with a picture of a tight demand/supply balance in both steaming and coking coal.

David Morris, head of forecasting at McCloskey Coal, said world-wide traded steaming coal supply would outweigh demand in 1996/97 by only 4.21 million tons, while in 1997/98 the surplus would shrink to a mere 0.89 million tons.

Gerard McCloskey, principal of McCloskey Coal and editor of the Financial Times International Coal Report, told the conference that after 1997 demand would become "very big indeed".

McCloskey said world steaming coal demand was expected to expand by 21 to 23 million tons next year, with more than a quarter of this to be filled by Australia.

Morris said about 20 Australian coal mines were presently developing either expanded output or about to begin production.

Of the 22.15 million extra tons to potentially come on stream next year, 12.3 million tons would be from New South Wales (NSW) and 9.85 million tons from Queensland, with 8.95 million tons steaming and 13.2 million tons coking coal.

Of the 81.3 million tons to potentially come on stream in the year 2000, 43.25 million tons would be from NSW and 38.05 million tons from Queensland, with 57.8 million tons steaming and 23.5 million tons coking coal.