HOUSTON Dec 18 The world economic slowdown has
caused UBS (UBS.N) to cut its forecast for U.S. coal prices in
2009 and 2010, an analysts' report said Thursday.
The investment arm of Swiss bank UBS AG dropped its
forecast for hard coking coal for steel-making to $85 a metric
tonne in 2009, from $180, and to $115 in 2010, from $130.
For thermal coal for power plants, the analysts cut UBS'
estimate to $55 a short ton <0.91 metric tonne> for premium
grade in 2009, from $70, and to $60 a ton in 2010, from $65.
"With the deterioration of global economic activity, coal
pricing and contracting remain uncertain," the report said.
The analysts wrote that, based on conversations with
executives at a recent UBS coal conference, they expect lower
prices to result in less U.S. coal production.
Many companies are slowing capital investment and
considering idling high-cost mines, the analysts wrote.
The report estimated that U.S. coal supply in 2009 will
decline 19.2 million tons after rising 15.8 million tons in
2008. Total U.S. production exceeds 1 billion tons.
U.S. exports rose sharply in 2007 and 2008 as the worldwide
economy boomed and competing exporting countries had delivery
Less U.S. output could limit oversupply and mitigate long
term price impact. Steel-making coal remains in short supply
and would rebound first in economic recovery, the report said.
(Reporting by Bruce Nichols; Editing by Christian Wiessner)