Lumps of coal worth more these days
As Asian economies continue to develop at breakneck speeds, so grows their need for power. Coal exporters worldwide are scrambling to keep up with demand, and that's pushing coal prices to record highs, but not everywhere. Sam Eaton explains.
Smoke billows from a coal-powered steel plant in western Pennsylvania. (Spencer Platt/Getty Images)
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Doug Krizner: Shares in coal mining companies rallied yesterday. The prediction is power plants will be increasing demand for coal. The price of the fuel is already trading at records highs. Coal operations worldwide are scrambling to keep up. And as Sam Eaton reports from the Marketplace Sustainability Desk, there's little economic relief on the horizon.
Sam Eaton: At Australia's main coal-exporting facility, it's now common for at least 70 bulk freighters to be waiting at anchor for their loads before shipping out to Asia.
Exporters are losing a million dollars a day per ship in delays. A small fee when you consider the price for that coal now runs around $73 a ton. That's up from about $50 a ton last year.
The reason for these record prices isn't the lack of coal. It's the ability to mine it fast enough to feed Asia's surging economy. And when it comes to setting the price, analyst Stephen Doyle says it's a sellers' market.
Stephen Doyle: Coal is a gotta-have commodity. And if you do have a shortage, you start scrambling around and paying up to get the replacement.
Doyle says global coal prices are projected to remain at record levels at least through 2009, but the pain of those high prices is limited to coal importing countries like Japan and South Korea. In the U.S., which has abundant coal reserves, prices are actually in a slump.
I'm Sam Eaton for Marketplace.
