China coal short-term outlook August 2021 Report

Commodity Market Report 01 September 2021

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Report summary

Coal prices sustained their strength in August for both thermal and metallurgical products. The government adopted various measures to expand output but substantial supply improvement has not materialised. With demand remaining strong, prices were well supported amid tight market fundamentals. We expect to see the thermal coal price weakening with additional supply from September though restocking demand will limit the fall. However, fundamental tightness will continue to fuel the metallurgical coal price. Please read our report for more details.

When will the additional supply come?
Prices keep breaking records due to domestic operation constraints and import shortages
Demand for thermal coal remains strong due to weather issues, despite economy slowing
Coke supply decline outweighs falling demand
Domestic: little improvement despite government support
Imports: high QHD price will lead to higher seaborne thermal coal imports in 2021 than 2020