China coal short-term outlook August 2017: regulated domestic output and declining imports tighten market Report

Commodity Market Report 07 September 2017

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Report summary

Entering August, the record-high temperatures felt in July gradually dropped, leading us to reduce our estimation of thermal coal demand. Persistently strong restocking by crude steel producers underpinned metallurgical coal demand. Although the government has allowed new supply to enter the market, we are yet to see a material rise in output. Ongoing safety inspections and coal management tickets are mainly to blame. The Ministry of Environmental Protection also updated the '2+26 policy' and we expect it will impact 65 Mtpa of coal demand.

Executive summary
- Key market data
Prices
- Supply uncertainty prevents significant fall in thermal coal prices
- Supply shortage amid strong demand boosts metallurgical coal prices
  - Key thermal coal prices – history and forecast, US$/t nominal
  - Hard coking coal price arbitrage at Tangshan steel mill, US$/t nominal
Demand
- Thermal coal demand rises and falls with temperature
- Worse air quality in H1 2017 results in stricter regulations for 2+26 cities
- High steel output and early restocking strengthen metallurgical coal demand
Supply
- Effects of additional capacity yet to materialise
- Shenhua and Guodian merger finalised

Tables and charts

This report includes 9 images and tables including:

Executive summary: Table 1
Monthly coal-fired generation, TWh
Monthly hydropower generation, TWh

Monthly throughput at Qinhuangdao, Mt
Monthly throughput at Huanghua, Mt
Monthly hot metal production, Mt
Monthly metallurgical coke production, Mt
Prices: Image 1
Prices: Image 2

What's included

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cms china short term market report data.xls

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China coal short-term outlook August 2017: regulated domestic output and declining imports tighten market

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China coal short-term outlook August 2017: regulated domestic output and declining imports tighten market

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