UPDATE 1-Peabody sees strong growth, firmer coal prices in 2010

SYDNEY, Nov 6 (Reuters) - U.S. coal miner Peabody Energy expects seaborne coal trade in the Pacific region to grow by more than 7 percent annually for several years, underpinned by robust demand from China and India. Contract prices of thermal and coking coal next year are also expected to see healthy increases, supported by a recovery in demand as economies regain strength after the global financial crisis, Peabody Chief Executive Greg Boyce said on Friday. "We see the vast majority of growth being driven by China and becoming more important is growth in India," Boyce told reporters in Sydney, adding that Pacific growth would outpace that in the Atlantic market. After demand for thermal and coking coal slumped in traditional importers such as Japan and Korea earlier this year, China emerged as a rare bright spot, importing huge volumes of coal due to the shutdown of many unsafe mines in the country. China is set to become a net coal importer for the first time this year, with thermal and coking coal imports from January to September having jumped 167 percent and 400 percent respectively, while exports have plummeted in the same period. "China is going to continue to be the largest importer of metallurgical coal and, we think, thermal coal. Go back five years and they were an 80 million plus a year net exporter, so it has been a significant shift that we think is structural." Boyce said India will also rely heavily on imports over the next five to six years to meet surging domestic demand. "There is no question that coal demand is continuing to increase. Spot prices are higher than benchmark prices and we are seeing economies starting to recover," Boyce said. Amid an expected recovery in demand, coal producers are now expanding their production capacity and investing in new port infrastructure. Peabody said last month that it would double exports from Australia in the next five years, bringing coking coal exports to between 12-15 million tonnes per year (mtpy) and thermal coal to 15-17 mtpy. (Reporting by Bruce Hextall; Writing by Fayen Wong) ((If you have a query or comment on this story, send an email to [e-mail]) Keywords: PEABODY/BOYCE ([e-mail]; [phone]; Reuters Messaging [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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