Australia Coal Price to Japan Seen Sliding to 5-Year Low on Glut

Japanese power utilities next year will pay the lowest price since 2009 for thermal coal from Australian producers as supply outpaces demand, according to a forecast from the Bureau of Resources and Energy Economics.

Power producers will pay $89 a metric ton for annual supplies starting April 1, Australia’s commodity forecaster said in a report today. That compares with $95 this year and $70 to $72 in 2009. Spot prices at the port of Newcastle, an Asian benchmark, have climbed 12 percent since September to $86, data from globalCOAL show.

New mines developed during the past few years are adding to a supply glut as demand growth slows, the bureau said. Glencore Xstrata Plc is among companies scheduled to produce more coal next year, adding tonnage equivalent to 3 percent of global trade, data compiled by Bloomberg show.

The supply overhang will limit higher prices in the near-and short-term, even amid predictions of increasing coal consumption, according to the bureau. Power producers’ purchases for winter stockpiles have underpinned recent price gains, the Canberra-based bureau said.

Shipments from Australia, the world’s second-biggest exporter, will rise to 196 million tons next year from 184 million in 2013, the bureau said, maintaining its previous forecast. Sales from Indonesia, the world’s biggest supplier, are estimated to climb to 420 million in 2014, from 409 million this year.

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