Scotiabank economists predict that the cost of coking coal, a key steelmaking ingredient, will increase by 31% this year to $169/metric ton in benchmark Asian markets from an average $129 in 2009. J.P. Morgan Securities is slightly less bullish, projecting 24% inflation to $160/metric ton.
Patricia Mohr, Scotiabank's vice president of economics and commodity market specialist, says "international coking coal supplies are tightening due in part to stepped-up demand in China and Japan and port and rail constraints in Australia," the key supply site. J.P. Morgan analyst John Bridges says that the "lack of dedicated new coking coal mine capacity offers short-term potential for further upside in coking coal prices."
Mohr suggests that "elements of an Asian-led 'super-cycle' have returned, with the China juggernaut leading the way, so that commodity prices will continue moving higher in 2010." She projects that steelmakers will need more coking coal, iron ore, scrap and ferroalloys because the nation's economy will grow by 9.5%, as opposed to 8.3% growth in 2009. Mohr says the second quarter "should see increases in negotiated prices under annual contracts for coking coal and iron ore."
Source: Purchasing.com
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