Dec. 10 (Bloomberg) -- Coal prices at Australia's Newcastle port, a benchmark for Japan, South Korea and Taiwan, gained 1.9 percent to a record on concern that demand is outpacing supply.

Power station coal for delivery within three months rose $1.69 to $89.76 a metric ton in the week ended Dec. 7, according to the globalCOAL NEWC Index, an Asian benchmark calculated each Friday. Prices slipped last week after five weeks of records.

Rio Tinto Group, Xstrata Plc and other mining companies in the Hunter Valley had planned to ship 18 percent more than Newcastle, the world's largest thermal coal port, will be capable of handling next year. Bottlenecks at Australian ports and heavy rainfall in Indonesia have driven prices higher.

``$100 is not impossible. It's a definitely a case of higher for longer,'' said Donovan Huang, Shanghai-based coal analyst with Nomura Securities. ``It's a great time for producers, not for utilities unless they can raise tariffs.''

Newcastle will have capacity to load 95 million tons of coal next year, according to Port Waratah Coal Services Ltd., the operator of the two coal terminals at Newcastle. Growth in Asian thermal coal demand may outstrip supply increases in the next few years, forcing power utilities to pay near-record prices for the fuel, UBS AG said in a Dec. 6 report.

China's Imports

China, the world's biggest user and producer of coal, will be a net importer of 18 million metric tons in 2008 after having ``nearly balanced'' export and import volume this year, UBS analysts led by Ghee Peh in Hong Kong, said in the report. Indonesia's production growth will slow this year and next, worsening the shortage.

The Bloomberg Asia Pacific Coal Index, that measures the performance of 17 coal companies has tripled this year, outperforming the 27 percent gain in the Bloomberg World Index.

UBS last month boosted its estimates for annual contract prices for thermal coal for the Japanese fiscal year starting April 1. Contracts may be settled at $90 a ton next year, rising to $105 in 2009, up from previous forecasts of $70 and $75, it said. National Australia Bank Ltd., Goldman Sachs JBWere Pty and Credit Suisse Group have all raised their forecasts for 2008 contract prices within the past month.

`Strong Demand'

``Coal is going to continue to fire power generation in places like China and India, and coal prices will continue to rise and demand will remain strong,'' said Bhagyesh Dash, managing director at Crosby Capital Partners Inc. in Singapore. ``Problems in places like Australia just exacerbate the issue.''

China boosted coal imports 44 percent to 42.34 million tons in the first 10 months of this year, the nation's customs department said Nov. 15. Exports dropped 18 percent to 43.26 million tons in the same period.

The nation's exports may decline to between 50 million to 60 million tons this year, China Shenhua Energy Co. President Ling Wen said in a Nov. 30 interview.

Japan purchased 59 percent of all coal exported via Newcastle in 2006, Taiwan took 14 percent and South Korea bought 10 percent, according to Port Waratah's annual report.

The nation's shipments dropped to 63 million tons in 2006 from 94 million tons in 2004, according to customs figures.

Japan's Buying

Japan, the world's largest importer of coal, bought 105 million tons last year, according to the International Energy Agency's September report.

Tokyo Electric Power Co., Asia's largest utility, burned 329,000 tons in October, 10,000 tons less than in the same period a year ago.

Chubu Electric Power Co., the biggest buyer of coal among Japan's 10 regional utilities, annually imports 10 million tons of coal. It buys half of its requirements from Australia, 40 percent from Indonesia and the rest from China.

Port Waratah is seeking approval from the Australian Competition and Consumer Commission for a modified proposal on how to allocate port and rail capacity next year as bottlenecks contribute to a buildup of ships waiting to load.

Port Waratah, Pacific National Pty and QR Ltd. are seeking interim approval for the new plan to start Jan. 1, 2008, the day after the existing system expires, pending final approval by March or April according to document on the commission's Web site.

Newcastle Queue

The queue of ships waiting outside Newcastle port to load coal reached a record 79 in June after storms disrupted operations and hasn't been less than 37 this year. There were 53 coal ships waiting to load as of Dec. 9, the Hunter Valley Coal Chain Logistics Team, coordinator of coal movements through the rail and port transportation system, said on its Web site.

Ships waited on average 15.49 days to load coal compared with 72 minutes for general cargo in the week ended Dec. 3, according to the port's Web site.

Sixteen ships with coal departed the Newcastle port for the week ended Dec. 1, three less than the previous week, the port said in an e-mailed statement. Twelve headed to Japan, three to Korea and one to Turkey, it said.

The globalCOAL monthly index for shipments from Newcastle rose $10.16, or 14 percent, to a record $85.35 in November.

To contact the reporters on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net; Michele Batchelor in Singapore at mbatchelor@bloomberg.net

Last Updated: December 10, 2007 02:10 EST