Coal prices jumped to a record of more than US$100 a tonne at Australia's Newcastle port, a benchmark for Asia, as snowstorms in China, power cuts in South Africa and floods in Queensland reduced output.
Power-station coal prices at the New South Wales port climbed US$23.09, or 25 percent, to US$116.44 a tonne in the week that ended on Friday, the second straight week of record prices, according to the globalCOAL NEWC Index. Coal rose 73 percent last year.
China, the world's largest producer and consumer of coal, will halt exports until April after the worst snowstorms in 50 years disrupted output. Power shortages in South Africa forced Anglo American PLC to close mines last month and in Australia, the world's biggest coal exporter, BHP Billiton Mitsubishi Alliance is among four miners that said they may miss deliveries after heavier-than-usual rain flooded pits.
"It's all stemming back to China, where it looks as if they've got some real problems," said Graham Wailes, a coal analyst at AME Mineral Economics Pty in Sydney. "South Africa is having its dramas; the pressure's on, it's a bit of a short-term squeeze."
The rising prices helped drive up coal producers' shares. Centennial Coal Co, Australia's second-largest coal company by sales, gained A$0.10, or 2.7 percent, to A$3.80 (US$3.38) on the Australian Stock Exchange, while Sydney-based Gloucester Coal rose A$0.15, or 2.5 percent, to A$6.25. Straits Asia Resources Ltd, a coal producer in Indonesia, rose as much as 16 percent in Singapore trading.
In China, more than three weeks of snow in the center and south of the country have brought transport networks to a standstill, killed at least 60 people and caused economic losses of at least 53.8 billion yuan (US$7.5 billion). China, reliant on coal for 78 percent of its power, is restricting exports to boost domestic supplies.
GlobalCOAL's monthly index for Newcastle thermal coal prices rose US$1.71, or 1.9 percent, to US$90.87 a tonne last month, the fourth successive monthly record. Newcastle is the world's biggest coal-export harbor.
The price increase comes as coal suppliers and buyers are set to begin negotiations on annual contract prices to take effect April 1.
UBS AG, Europe's biggest bank by assets, on Friday raised its forecasts for thermal coal contract prices for this year and next, citing the coal "crisis" in China and supply disruptions in Australia. Contract prices may rise to US$100 a tonne this year and to US$125 next year, the bank said.
In addition to BHP Billiton Mitsubishi Alliance, Ensham Resources Pty, Wesfarmers Ltd and Macarthur Coal Ltd have warned customers they may miss contracted deliveries after rains disrupted production.
"I just don't think the supply solution is readily available and that's probably why you've had these huge increases," Wailes said.
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