Coal prices look set to remain strong in 2008, although they may not reach the record highs of 2007, which came about on the back of surging Chinese demand.

Global supply is expected to increase by around 35 million tonnes in 2008. If there is, as predicted by industry insiders, a small surplus in 2008, somewhere in the order of 10 million tonnes, this may bring a corresponding dip in prices.

However from 2009 to 2015 world coal markets should move upwards. While a deficit is a possibility in 2008, the infrastructure-driven supply problems in Australia, Russia, South Africa and the United States could see that surplus quickly revert to a deficit.

Strong demand and supply challenges in most of the world’s coal exporting countries should continue to keep prices at near-record highs.

Strong demand and infrastructure constraints are expected to make for significant increases in the price of Low Volatility PCI coal in 2008. In a Dow Jones newswire report Macarthur Coal’s vice-president, corporate development, Ian McAleese said high coke prices will see steelmakers looking to utilise as much LV PCI as possible.

McCloskey’s Coal Report predicts LV CPI producers will be looking for 2008 contract prices between 130 and 140 US dollars per tonne, an increase of almost 90 percent at current prices.