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Chasing Asia: Global thermal coal long-term outlook H2 2016

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06 December 2016

Chasing Asia: Global thermal coal long-term outlook H2 2016

Report summary

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.

Table of contents

  • Executive summary
    • Phase I (2016-2018): the great rollercoaster
    • Phase II (2019-2024): treading water ahead of new supply requirements
    • Phase III (2025-2035): arrival of new basins – at what cost?
    • EMEARC: rapid declines in seaborne demand in Europe, offset somewhat by MENA
    • Cost deflation has ended: all the low hanging fruit is gone
    • Asian suppliers will dominate supply but long-term growth will include Atlantic producers
    • Dry bulk ocean freight rates will recover from their lows but not until balance is restored in vessel supply and demand
  • Risks and uncertainties

Tables and charts

This report includes 15 images and tables including:

  • Global thermal coal demand for power (Mt)
  • Global thermal coal demand for non-power (Mt)
  • Seaborne thermal coal demand by region (Mt)
  • Seaborne thermal coal demand change by region (Mt)
  • Thermal coal spot price vs. 90th percentile cost
  • Spike in Chinese imports tighten markets in 2016
  • Seaborne demand vs. supply status (Mt)
  • FOB thermal coal price forecast (real 2016 US$/t)
  • High/low price ranges: FOB Newcastle
  • High/low price ranges: CFR ARA
  • Seaborne export cost curve 2016 (energy adjusted)
  • Seaborne export cost curve 2035 (energy adjusted)
  • Seaborne thermal coal supply by country (Mt)
  • Cumulative change in seaborne thermal coal supply by year from 2016 levels (Mt)
  • Ocean freight rate cost assumptions for main ocean freight routes (US$/t)

What's included

This report contains:

  • Document

    WM CMS Thermal H2 2016 LTO Slidepack December 2016.pdf

    PDF 2.80 MB

  • Document

    CMS Thermal Coal Prices Data November.xls

    XLS 2.70 MB

  • Document

    Chasing Asia: Global thermal coal long-term outlook H2 2016

    PDF 486.38 KB

  • Document

    Chasing Asia: Global thermal coal long-term outlook H2 2016

    ZIP 3.69 MB

  • Document

    Executive summary

    PDF 82.40 KB

  • Document

    Prices

    PDF 131.87 KB

  • Document

    Demand

    PDF 129.30 KB

  • Document

    Supply

    PDF 189.60 KB

  • Document

    Infrastructure

    PDF 85.82 KB

  • Document

    Risks and uncertainties

    PDF 88.39 KB

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