NEW YORK North American
coking coal producers could take market share from those in
Australia as new taxes and labor costs make that countrys
coking output less competitive.
U.S. and Canadian metallurgical
coal is becoming more competitive for Chinese and European
producers, since Australia has margin pressure from rising
production expenses, according to a report by New York-based
investment bank Dahlman Rose & Co. LLC.
Cost inflation across the
industry has led Australian producers to review operations,
defer major capital expenditures and curtail high-cost
The country has experienced the
most severe structural upward cost pressure as a result of
increased labor and raw material costs and new government
royalties and regulations, Dahlman Rose said.
"The combination of these
factors are tipping the scale in favor of Canada and the United
States and providing the lowest-cost North American producers
with the opportunity to gain market share," analyst Daniel
Scott said in the report.
"Though Australia remains the
standard in the global coking coal market and serves as the
barometer for benchmark met coal settlements, its position as
the low-cost producer has eroded and the competitiveness of the
industry is being reshuffled due to its cost inflation relative
to the United States and Canada," he added.
The investment bank lowered its
projection for average 2013 metallurgical coal prices to $180
per tonne from $200 per tonne previously, and predicted that
prices will average $200 per tonne in 2014.
A version of this article
was first published by AMM sister publication Steel