Thermal Coal Price Gains Could Outpace Oil, Gas

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Thermal coal prices could jump more than 30% this year to a record, outpacing the gains expected in crude oil and natural gas, according to a report by Bloomberg News. Surging demand in China and India along with Japan looking for alternatives to nuclear power following the March earthquake are expected to be drivers of higher thermal coal demand.

Prices for thermal coal shipped from Australia's port of Newcastle, the Asian benchmark price, averaged $99 per metric ton last year, but could jump to $130 a metric ton this year, Bloomberg reported. NYMEX-traded crude oil futures could rise 26% while natural gas is expected to be flat.

China's coal purchases could increase by nearly 8% this year while India's coal buys could soar 28%, Bloomberg reported, citing Societe Generale. Deutsche Bank says Japan could consume an added 1 million metric tons of coal in 2011 as it seeks fuel sources to replace lost nuclear capacity.

Thermal could average $132 a ton this year before jumping to $145 per ton in 2012, Bloomberg reported, citing Deutsche Bank. Analysts in a Bloomberg survey gave price forecasts for thermal coal ranging from $118-$150 per metric ton.

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