Monday, October 1, 2007

Record coal prices hammer power generators

From Reuters:

Record high coal prices and tight supply are piling the pressure on electricity generators already hit by soaring oil markets and high gas prices, industry players say.

Coal fuels about 40 pct of global power generation. Physical coal prices for delivery into Europe have risen by over 50 percent this year.

High freight rates are tightening the screws on prices and utilities and cement producers, also big coal users, may be forced to scale down operations.

"The market is having to adapt to coal prices, to freights, which we've never seen before," a trader said.

"I do believe that before the end of the year it's possible that some generators in Asia will have to look at turning off their plants because they won't have enough coal," said a coal producer.

Physical coal prices on Thursday surged to a record $102.00 a tonne delivered into Europe, from $65.00 in the first quarter, because rampant demand in Asia has sucked in millions of tonnes originally destined for the Atlantic market....MORE