Replies to post #139 on Hillsborough Resources (HLB)

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Jan. 28 (Bloomberg) -- Coal rose to a record in Asia and also advanced in Europe as floods in Australia and snow storms in China restricted output, spurring generators to secure supply.

Anglo American Plc today said operations have resumed at five South African mines shut Jan. 25 because of power shortages. Coal prices at Australia's Newcastle port, a benchmark for Japan, South Korea and Taiwan, jumped 3.9 percent to a record $93.35 a metric ton in the week ended Jan. 25, according to globalCOAL. European coal advanced to a two-week high.

``It's difficult to see in the next 18 months to two years who would have the capacity to significantly increase supply,'' Graham Chapman, managing director at Richmond, U.K.- based consultant Energy Edge Ltd., said by telephone today.

In Australia, the world's biggest coal exporter, Macarthur Coal Ltd. and Wesfarmers Ltd. said they wouldn't be able to meet contract supplies from some mines in Queensland state after heavy rain. China ordered domestic coal shippers to halt exports after heavy snow and rail congestion shut supplies to 5 percent of the country's coal-fired generators.

Coal for delivery to Amsterdam, Rotterdam or Antwerp with settlement from April through to the end of June gained 75 cents, or 0.6 percent, to $124.50 a metric ton as of 12:13 p.m. in London, according to ICAP Plc prices. That's the highest since Jan. 10.

Weglokoks SA, Poland's largest coal exporter, said today it has no supply available to sell to clients without existing contracts. Poland was the 10th-largest exporter of coal used in power plants in 2006.

Indonesian Supply

PT Bumi Resources, Asia's third-largest coal producer, and smaller rival PT Berau Coal today said they can't increase production because of government commitments and a lack of equipment.

Taiwan Power Co., the island's biggest electricity producer, said it plans to buy coal in the spot market because of concern China will stop exports. The utility issued a tender last week for about 1 million metric tons of coal and may buy more in the spot market.

``Even before these developments, spot prices for coal and coke were at record high levels,'' Macquarie Group analysts led by Jim Lennon said in a report. ``Current price negotiations for annual contracts could be settled at much higher levels than previously thought.''

Xstrata Plc, Rio Tinto Ltd. and PT Bumi Resources will seek higher contract prices for 2008, with Australian coal likely to fetch more than $100 a ton at loading ports, compared with $55.65 a ton in 2007, Christine Salim, an analyst at Samuel Sekuritas in Jakarta, said in a note to clients today. The global average may be $80 a ton this year, and $90 a ton in 2009.

European Coal

European coal prices increased 87 percent in the past year as utilities from Germany's E.ON AG to Enel SpA in Italy sought an alternative to increasingly expensive oil and gas, and India stepped up imports from South Africa. Rising prices in Europe and Asia bolstered a U.S. market that hasn't been linked to the international coal trade for two decades, because the country produces enough to meet domestic use.

``If these problems linger, there's going to be significant pressure on a market that was already robust,'' Stephen Leer, chief executive officer of Arch Coal Inc., the second-largest U.S. producer, said in a Jan. 25 interview from St. Louis.

The other primary coal-exporting countries, Indonesia and Colombia, are already at or near capacity and may struggle to boost supplies, he said.

Export Markets

``Our ports are a little congested, but we still have wiggle room to sell into export markets,'' Leer said.

Coal for delivery to Big Sandy Barge, a benchmark for the Eastern U.S., jumped $3.50, or 5.8 percent, to $63.50 a ton in spot trading last week, according to data compiled by Bloomberg. Eastern coal gained 61 percent in the past year. In the West, at Wyoming's Powder River Basin, coal rose 33 percent to $12 a ton, according to Bloomberg data.

Consol Energy Inc. plans to open a terminal later this week in Baltimore that was forced to halt shipments when a portion of a pier collapsed about four weeks ago. Consol's port can handle about 15 million tons a year, more than twice the company's exports in 2006.

U.S. exports may climb to 75 million tons this year from 50 million in 2006, Jeremy Sussman, an analyst at Natixis Bleichroeder in New York, said in an interview.

The biggest U.S. producers are scheduled to report fourth- quarter earnings this week. Analysts forecast greater profits at three of the top four producers, because of higher prices and increasing demand internationally.

To contact the reporter on this story: Christopher Martin in New York at [e-mail] .

Last Updated: January 28, 2008 07:46 EST