A collapse in commodity prices due to the global financial turmoil is a blessing for Asia, whose huge appetite for natural resources has prompted cash-rich firms to go bargain hunting.

Analysts say Asia’s hunger for resource assets, despite the financial crisis, shows firms are prepared to risk further commodity price downside to secure raw material supplies to power economic growth that is still significantly faster than in the United States and Western Europe.

Shares in Australia’s third-largest oil and gas firm Santos Ltd jumped on Monday on a report that China National Petroleum Corp, parent of Asia’s top oil and gas producer PetroChina, may team up with a foreign firm to buy the company.

Read also Terry McCrann’s Time to prepare for Chinese ‘invasion’ on the Herald Sun:

JUST a few months ago it would have taken more than $200 billion to buy Rio Tinto. Now our second biggest resources group – and all its resources – could be picked up for about $40 billion.

Plus of course, the necessary takeover premium. Although I suggest what would now be ‘necessary’ is something less than the incumbent board thought was required from BHP Billition.

Especially if any future buyer was paying cash. Like for instance a buyer with the word ‘China’ in its name.

Now I’m not suggesting that is imminent. Although the Chinese Chinalco company must be seriously considering its options.

© Xiao Qiang for China Digital Times (CDT), 2008. | Permalink | One comment | Add to del.icio.us
Post tags: coal price, Fuel Prices, gas price
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China is facing its worst power shortage since 2004 — a supply-demand gap that, according to the State Electricity Regulatory Commission (SERC), will reach 16 million kilowatt this summer.

At the core of the shortage are spiny issues over coal-fired power that the government hopes to resolve through a series of measures aimed at ending price increases and guaranteeing supplies.

Zhao Xiaoping, deputy director of the National Energy Administration, said July 22 that the coal market “cannot rely only on market mechanisms. It also needs government control measures.”

To that end, the government’s National Development and Reform Commission (NDRC) in June announced price caps for the type of thermal coal used to generate power. And on July 24, the government clamped down harder with another set of price controls for spot coal shipped to major ports and distribution centers.

© Liu Yong for China Digital Times (CDT), 2008. | Permalink | No comment | Add to del.icio.us
Post tags: coal price, power shortage
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Just since then, Asian prices have shot up an additional 34%. Last week, coal benchmarks hit all-time highs in the U.S., Europe and Asia. That’s adding to orries over global inflation already stoked by rising prices for everything from crude oil to cattle feed. “The velocity of the change has been remarkable,” says Thomas Hoffman, senior vice president for external affairs for U.S.-based coal supplier Consol Energy Inc., which he says is considering holding off on some commitments to supply coal to see if prices rise even further.

For the world, which uses coal for about 40% of its electricity, the result is similar to what happened after China became a net importer of oil in 1993. But the Chinese factor is unfolding much faster with coal. It wasn’t until China’s industrial development shifted into overdrive this decade that the nation began to shake global petroleum markets. Oil’s big price surge came after widespread brownouts in China in 2004 forced factories there to buy diesel fuel for backup generators, increasing the country’s foreign oil demand.

As need for coal worldwide is increasing, key coal suppliers — including Australia, South Africa and Russia — are struggling to meet demands.

The “China-driven coal boom” may be a windfall for the U.S. mining industry, according to the report.

“We’ve as an industry never seen such a dramatic…upturn in the market that seems to have such extended strength,” Bennett Hatfield, chief executive of International Coal Group Inc., another U.S. coal producer, said Thursday in a call with analysts.

Experts predict coal prices will keep rising into 2009.

© Julie Johnson for China Digital Times (CDT), 2008. | Permalink | No comment | Add to del.icio.us
Post tags: coal, coal price
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Coal, whose price surge has already outrun those of crude oil and natural gas, is generating an even louder buzz as a rash of bad weather has reduced its production globally.

Citigroup earlier this week raised its forecast for thermal coal, saying it now expects prices for the benchmark product to double this year as blizzards in China, power outages in South Africa, and floods in Queensland cut into global output. Meanwhile, demand for coal keeps rising as the world’s electricity use expands.

The recent run-up in fuel prices means higher costs for consumers and industries heavily dependent on electricity. In China, which gets most of its electricity from coal, smaller metals manufacturers could go out of business due to higher electricity prices, analysts said. At the same time, higher traditional energy prices are likely to push China and other countries to pursue alternative energies to heavily-polluting coal.

© Kate Zhao for China Digital Times (CDT), 2008. | Permalink | No comment | Add to del.icio.us
Post tags: coal industry, coal price, power shortage, Snowstorm 2008
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