Bloomberg reported that Deutsche Bank AG raised price forecasts for thermal coal by as much as 17% on expectations that a shortage of the fuel will widen over the next two years.
Mr Daniel Brebner, a London based Deutsche Bank analyst, said that export power coal prices at Richards Bay, South Africa, a market benchmark, will average USD 118 a tonne in 2011 and USD 140 in 2012. That is up from previous estimates of USD 110 and USD 120 respectively.
He added that "Beyond winter, we expect that the thermal coal market will remain tight as strong demand from emerging markets, particularly China and India, drives record levels of imports. Supply is anticipated to be constrained in key producing regions such as China, Indonesia and Australia."
Mr Brebner said that coal demand will outpace supply by 28 million tonnes in 2011 and by 30 million tonnes the year after. Richards Bay coal prices rose to USD 107.11 a tonne last week, the highest in more than two years. Prices rose as lower than usual temperatures and snowstorms in Europe push up demand for the fuel.