Chasing Asia: Global thermal coal long-term outlook H2 2016
Thermal coal is not crumbling. The great price rollercoaster of 2016 peaked in early November, and now looks set to speed towards marginal costs. But prices below costs for a substantial period of time could be a thing of the past. Global overcapacity - which was loose mainly in Indonesia - now looks significantly tighter. A China demand shock, as we've seen this year, was enough to eliminate most of it. And three main sources of supply - Colombia, Russia and Australia - are all at record export levels. Demand now turns to a game "chasing Asia". China's role in the seaborne market will be ever-present, but other nations present interesting long-term propositions, lower up the development curve than China.