3 Dec 2009 18:07

Coking coal prices to rise 54% in 2010; energy coal

MOSCOW. Dec 3 (Interfax) - Domestic prices for coking coal in Russia will rise 54% next year to $100 a tonne and prices on energy coal will increase 25% to $30 a tonne, Uralsib forecast in a note to investors.

The average annual price of coking coal will decline 62% in 2009 to $65 a tonne, the note says.

The forecast increase in 2010 is based on current spot prices and forecasts for that demand in China for steel and the commodities used to produce steel will hold steady.

Spot prices for coal in 2010 will be no lower than currently, the analysts said. In 2011 they will rise 18% to $118 a tonne and will remain at that level in 2012.

Coking coal production will rise 18% in 2010 to 72 million tonnes and energy coal production will increase 9% to 254 million tonnes.

Russian coking coal production reached the monthly pre-crisis level of 6 million tonnes in October, according to available data. The Uralsib analysts believe it highly likely production will remain at that level or increase if capacity utilization in the global steel sector continues to grow.

Coking coal production in 2009 will approach 61 million tonnes, including 6.1 million tonnes in December, which would amount to an 8% decline compared with 2008.

Costs will be significantly lower in 2009, but those costs could rise somewhat in 2010 given that coal producers must perform a large volume of preparatory work and given the strengthening ruble.