China coal long-term outlook H2 2018: supply-side reform to drive price formation

China’s coal market performed abnormally in 2018. Unusual weather conditions, import restrictions and high inventory on the thermal side caused coal prices to fall while demand was high, and rise when demand weakened. On the metallurgical coal side, environmental protection efforts pushed the price of premium hard coking coal up to RMB 1,760/t, the highest since 2008. However, we believe some predictable fundamental factors will support our forecast.