Sept. 14 (Bloomberg) -- Japanese utilities may have to pay 22 percent more for Australian coal next year after South Korean buyers locked in supplies seven months early, anticipating a shortage, Goldman Sachs JBWere Pty. said.

Prices of thermal coal may jump to $68 a metric ton, the Melbourne-based securities firm said in a report yesterday, increasing an earlier forecast by 10 percent. Korean utilities ordered one-quarter of their planned 2008 purchases from Australia at about $66, before contracts start April 1, it said, citing McCloskey's Coal Report

The ``unprecedented'' Korean purchases signal concern among buyers about availability next year, Goldman said. Asian benchmarks for thermal coal sold under annual contracts are poised to rise to a record for a second year after China became a net importer of the fuel for the first time. Contract prices were settled at a record $56 for the year that started April 1.

``With spot thermal coal prices ex-Newcastle currently around $67 a ton and the Asia-Pacific seaborne market more likely to tighten than ease over the next few months, we believe the major Australian coal suppliers have already established a floor price around $66-$68 a ton for next year's contract with the Japanese power utilities,'' Goldman analysts Malcolm Southwood and Paul Gray said in the report.

South Korea

South Korea's power producers agreed to buy about 5 million metric tons of their contract requirements next year at a price almost as high as the spot price at Australia's Newcastle port, Goldman said, citing the report by The McCloskey Group Ltd.

Xstrata Plc, Rio Tinto Group and BHP Billiton Ltd. are among Australian coal producers that ship the power-station fuel through Newcastle, the world's biggest coal-export harbor. The spot price for coal exported from the New South Wales port fell 2.5 percent last week to $66.30, after reaching a record $72.37 last month, according to the globalCOAL Index.

Goldman Sachs JBWere also raised its estimate for thermal coal contract prices in the year starting April 1, 2009, to $60 a ton from an earlier prediction of $55, while retaining longer- term forecasts at $50.

Goldman's forecasts are higher than those from Wilson HTM Ltd. and Australia & New Zealand Banking Group Ltd. Wilson HTM in a Sept. 10 report raised its forecast for thermal coal contract prices for the year starting April 1 by 14 percent to $62.50 a ton. It raised its long-term forecast by 11 percent to $45.

ANZ Increase

ANZ is poised to increase its forecast for the 2008-09 contract price from an existing estimate of $57 a ton to more than $60, probably in the low $60s range, Andrew Harrington, a commodity analyst at the Melbourne-based bank, said today.

``Many of the supply issues'' affecting thermal coal apply to semi-soft coking coal, while demand from Japanese steel mills is running at a record, Goldman Sachs JBWere said. It raised its contract price forecast for that grade of coal in the year starting April 1, 2008, to $76 from $72, retaining a premium of about 12 percent over power-station coal. The contract price for the year starting April 1, 2009, for semi-soft coking coal may be $67 instead of an earlier forecast of $62, it said.

Goldman Sachs JBWere left its forecast for hard-coking coal contract prices in the year starting April 1, 2008, unchanged at $120.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net

Last Updated: September 14, 2007 02:37 EDT