AUSTRALIANS HOPE THEY'VE SEEN BOTTOM OF THE COAL PRICE BARREL

AUSTRALIANS HOPE THEY'VE SEEN BOTTOM OF THE COAL PRICE BARREL

Australian coal companies are optimistic that the downward trend in prices has bottomed.

But they are not expecting any immediate improvement.A halt to the slide of the past few years will be a big improvement, and it is the best we can hope for at the present time, an industry executive said.

An improvement of around US$43 a ton in the spot price for coal since last November has given rise to what has been described as some very faint glimmers of partial recovery.

The optimism also has been encouraged by statistics suggesting increasing industrial production in Japan and other major coal-consuming countries.

Less gloom is seen in prospects for the international steel industry, although a vast improvement in output is not expected.

Coal analysts at Sydney stockbrokers BZW Meares have reported that Australia's coal industry has begun a long journey toward recovery.

At least there appears to be some belated recognition on behalf of Japanese importers that it could be against their long-term interest to continue to squeeze export prices to the point where further local mines are forced out of production, they said in their latest industry report.

They warned that any improvement would not necessarily lead to the reopening of mines or the re-employment of workers laid off during the rationalization of recent years.

They stated that it could not be assumed that all coal producers would return to profitability if prices rose.

But the analysts stressed that the future of the coal industry is brighter than it has been for two or three years.

The industry was given a note of caution from international brokerage house Merrill Lynch, which stated in its February quarterly review that world coal trade had peaked and would decline slightly because of the world energy surplus, with competition increasing among producers with excess capacity.

The review noted that coal had lost some market share to oil in the production of electricity in Japan and the European Community in the last quarter.