Spot thermal coal prices in Asia are expected to reach $90 a tonne by the fourth quarter, setting the stage for a 25 percent jump in 2010 benchmark contract prices, UBS said on Monday. The bank said in a research report that although spot thermal coal prices have languished at a 3-1/2 low of around $66 a tonne in the third quarter, higher Chinese imports.
Recovering demand from other North Asian countries and supply difficulties would tighten regional supplies and boost prices. "Rapidly improving lead indicators should result in higher power and coal demand in fourth quarter of 2009 and first quarter of 2010," UBS said in a report led by analyst Ghee Peh.
"We believe modest rises in both thermal and coking coal demand from the traditional customers could significantly tighten the seaborne market and lift prices." UBS said it is forecasting a headline thermal coal contract price between Japanese utilities and Australian miners of $90 a tonne in the Japanese fiscal 2010, compared with this year's agreed price of between $70-$72 a tonne.