New high for coal

Only four years ago, producers were celebrating a 20-per-cent increase that lifted the 2004 contract price for a tonne of steelmaking coal to $51. UBS Investment Research reported on Tuesday that the Australian coal giant had reached a deal with the world’s largest steelmaker, Arcelor Mittal, at $305 US a tonne, for the contract year that began April 1.

“I think the only thing we can say, and certainly not in regard to the negotiations side, is that we are seeing the market come to terms with the flooding in Australia and the tightness of the demand that existed even before the supply disruptions,” said Colin Petryk, investor relations director for Fording Coal Canadian Trust, in a telephone interview.

The Fording Canadian Coal Trust, which operates five major steelmaking coal mines in southeast B.C., is a price-taker rather than price-maker, and is staying tight-lipped while it awaits the official outcome of Australian negotiations before settling with its own buyers.

But a company spokesman suggested that new prices reflect a number of supply-related issues in the market, including flooding of Australian coal mines in January coupled with a tightening world supply of the commodity.