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    just a little light reading for a wednesday arvo

    COKING coal is the top pick of commodities for 2010 at Canada's Scotiabank.

    The bank, whose commodity pronouncements command great attention in North America, said in its latest weekly report that it expects the annual contract price for Western Canadas premium grade hard coking coal sold to Japanese and other steel makers to climb from todays $US128/tonne to $US169/tonne -- and possibly higher -- in the Japanese fiscal year which starts on April 1.

    The news coincides with takeover offer by Macarthur Coal for Gloucester Coal -- the latters main appeal being its lucrative coking coal operations.

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    Scotiabank notes that spot prices out of Australia have already climbed to $US170/tonne in international markets, well above the present contract price of $US129/tonne negotiated in March between the Japanese steel mills and the alliance of BHP Billiton and Mitsubishi.

    The report says that supplies of coking coal are tightening. Last April about 35 million tonnes a year in production capacity was idled but now the out-of-operation capacity is just 11.5m tonnes. On the Australian scene, Scotiabank notes that port and rail constraints here are still a big problem, which has led to increased demand for coking coal out of British Columbia and Alberta.

    Once again, Australia shoots itself in the foot with its failures on infrastructure.

    One other point: minerals are not the main commodity game. In November, overall mineral prices rose by 2.5 per cent month on month, matched by the rise in prices for agricultural products. But forest products rose 5.6 per cent while the oil and gas sector saw its index shoot up 10.4 per cent in November.
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