The Australian Bureau of Agriculture and Resource Economics said spot and contract prices would fall in real terms driven by increases in coal sector productivity.
“Ongoing improvements in coal mine productivity in key production regions and projected increases in thermal coal exports from major producers, including Australia, Indonesia and South Africa, are expected to offset any upward pressure on thermal coal prices,” ABARE said.
In addition, global energy demand will ease, placing further downward pressure on thermal coal prices.
In the short term ABARE expects thermal coal prices to be supported, to some extent, by continued demand growth in Asia.
World thermal coal trade is estimated to have expanded by around 4% to 571 million tonnes in 2005, according to the forecaster, and is expected to increase in 2006 by 2% to 584Mt.
By 2011 global thermal coal trade is projected to reach around 636Mt.
The value of Australian energy mineral exports in 2006-07, including thermal coal and oil and gas, is expected to rise by a modest 2.3% to $43.6 billion, after the 43.8% leap in 2005-06.
Thermal coal exports are forecast to rise to 111Mt in 2005-06, an increase of 4.7Mt on 2004-05. This should rise to 113.7Mt the following year, and reach 133.2Mt by fiscal 2011.
ABARE expects Australia’s coal production capacity to increase significantly over the medium term, thanks to an injection of capital. Capacity expansions are set to increase domestic production to 203Mt in 2010-11.
Projects being brought on line, including the Ashton, Mount Arthur, Rolleston and Ravensworth West projects, will contribute an additional 20Mt by 2010-11. Projects ready to enter the construction phase, such as Ulan Underground, Mount Owen, Wambo Underground, Kogan North, Clermont and Coorabong/Mandalong, could provide an additional 14Mt out to 2010-11, ABARE said.
