Coal prices may rise further as Australia, Africa exports disrupted

St. Louis, Jan 28 | Updated: Jan 29 2008, 05:53am hrs
Coal prices may rise for a seventh week in the US as electricity shortages in South Africa and flooding in Australia disrupt supplies from the worlds two biggest exporters.

European coal prices rose the most in three weeks on January 25 after Anglo American Plc, South Africas second-biggest producer, stopped five of nine mines because power supplies couldnt be guaranteed by state utility Eskom Holdings Ltd. In Australia, the worlds biggest coal exporter, higher-than-normal rains have curtailed production and shipments.

If these problems linger, theres going to be significant pressure on a market that was already robust, Stephen Leer, chief executive officer of Arch Coal Inc., the second-largest US producer, said in a January 25 interview from St. Louis.

European coal prices increased 87% in the past year as utilities from Germanys E.ON AG to Enel SpA in Italy sought an alternative to rising oil and gas prices and India stepped up imports from South Africa. Increasing prices in Europe and Asia bolstered a US market that hasnt been linked to international coal trade for two decades, because the country produces enough to meet domestic use. Coal for delivery to Big Sandy Barge, a benchmark for the Eastern US, jumped $3.50, or 5.8%, to $63.50 a ton in spot trading last week, according to data compiled by Bloomberg. Eastern coal gained 61% in the past year. In the West, at Wyomings Powder River Basin, coal rose 33% to $12, according to Bloomberg data.

Bloomberg