China and India could increase coal imports by 78 percent to 337 million tons next year

China and India could increase coal imports by 78 percent to 337 million tons next year, raising prices further from the highest in two years and divert supplies from Europe to Asia.

China could buy 233 million tons of fuel exports next year, up from net imports of 143 million in 2010, Citigroup Inc. said in a report dated 29 November. India faces a shortfall of 104 million tonnes in the 12 months ended in March 2012, mjunction Services Ltd., a commodities trader based in Calcutta, said in a note of 06 December, citing Coal Minister Sriprakash Jaiswal .

two fastest-growing major economies in Asia are burning more fuel economic expansion and increasing demand for electricity. The International Monetary Fund forecasts that China's gross domestic product will expand next year by 9.6 percent and India 8.4 percent. China added about 51 gigawatts of coal capacity last year, more than half the total capacity of the United Kingdom, according to Daiwa Capital Market and the U.S. Department of Energy.

"All indications are for increased demand in 2011," said Andrew Harrington, an analyst at Paterson Securities Ltd. in Sydney, in an interview from 09 December. "China has become much more important, especially because of expectations that they will be unable to meet their own needs for domestic supply."

China's appetite for the goods sent internal reference prices at the port of Qinhuangdao, a maximum of two years from $ 129 per tonne for the week ending Nov. 26, according to IHS McCloskey, a researcher at Petersfield, UK Kingdom.

fuel for power plants in the Australian port of Newcastle, the world's largest port for coal export, and Richards Bay South Africa rose to its highest since October 2008, according to data compiled by us IHS McCloskey.

Offer 'limited'

China will need 2 billion tons of coal in the next 10 years to boost the country's industrial development, the China Securities Journal reported today, citing Dai Yande, deputy director of China Institute of Energy Research.

"The thermal coal market will remain tight as strong demand from emerging markets, particularly China and India, the units of record levels of imports," said Daniel Brebner and Xiao Fu, the London-based analysts at Deutsche Bank AG. "Supply is expected to be limited in the major producing regions such as China, Indonesia and Australia."

Prices in Australia's Newcastle port, a benchmark for Asia, rose to $ 114.50 a tonne in the week ended Dec. 10, according to IHS McCloskey.

Export prices at Richards Bay Coal Terminal gained $ 2.89 to an average of $ 110 per tonne in the week ended December 10, IHS data showed McCloskey. Benchmark European coal derivatives closed at $ 113 a tonne yesterday, the highest closing price this year. Coal for delivery to Amsterdam, Rotterdam or Antwerp with settlement next year dropped $ 1.50 to $ 111.50 a tonne from 11:52 am London time.

Indonesia Rates

The government of Indonesia raised the benchmark price for December sales by 8.3 percent from the previous month, the biggest increase since its introduction in February, the Ministry of Energy said on 8 December. The benchmark price for fuel with a gross energy value of 6,322 kilocalories per kilogram rose to $ 103.41 a tonne this month, according to the Directorate General of coal and minerals.

The use of coal in Asia rose 6.4 percent last year, an increase of over 0.8 percent in oil consumption, according to BP Plc.

Prices have also increased due to disruptions in the supply of heavy rains and flooding in the mines in Indonesia, Colombia and Australia, while the export growth in South Africa has been pressed by the lack of rail capacity.

Xstrata Plc, the world's largest exporter of thermal coal, has declared force majeure on some shipments from Australia on December 7 due to flooding of the mines. PT Bumi Resources, the largest coal producer in Indonesia, revised down its coal production target by 6 percent this year, heavy rains hampered mining, Dileep Srivastava Director on November 11.

South Africa shares

Such disruptions have led to South Africa and Colombia to divert supplies from traditional markets in Europe to better paying Asia.

South Africa accounted for about 30 percent of imports of thermal coal in India this year, according to the ministry. Shipments in the first nine months of this year increased 16 percent to 15.2 million tonnes, while China's purchases increased to 5.1 million tons through October compared with 1.52 million tons cared for all of 2009, as mjunction Services, which is backed by Tata Steel Ltd. and Steel Authority of India Ltd., and Chinese customs data.

"The strong demand for coal in China and import growth will continue throughout 2011," said Jeffrey Landsberg, president of New York, Commodore Research & Consulting, December 10 in an e-mailed response to questions. "China still has many decades left to develop. Only a fraction of the population, and actually only the eastern part of the nation, has grown deeper. The rest of the country must also develop."