Commodity Market Report
China coal short-term outlook July 2020: floods dampen demand and prices
Report summary
GDP growth of 3.2% in the second quarter indicates China’s economy is back on the positive growth track. However, floods in southern parts of the country are casting a shadow over demand for both thermal and metallurgical coal. The floods have constrained both power and non-power thermal coal demand. Hydro generation has been strong following heavy rainfall, squeezing coal generation growth to just 1% in July and August. Non-power coal demand has also been constrained with cement output declining more than the historical average. As such, we expect the Qinhuangdao 5,500 price to remain on a downward trend throughout August. Metallurgical coal demand has also been impacted as the floods have subdued steel demand. Coal stocks are building up and Liulin #4 prices showed their first drop in two months. However, we are more optimistic for metallurgical demand in the second half of the year, thanks to support from economic stimulus packages. Read our report for more details.
Table of contents
- Floods pressure thermal coal prices downwards
- Coking coal inventory back on upward trend, price contained before recovery
- Floods and hydro generation will continue to impact demand
- Steel demand to be robust after floods, given strong stimuli in place
- Output in Inner Mongolia constrained
- Mild growth expected in July and August
Tables and charts
This report includes 10 images and tables including:
- Key thermal coal prices: history and forecast (US$/t)
- Hard coking coal price arbitrage at Tangshan steel mill (US$/t nominal)
- Monthly coal-fired power generation (TWh)
- Monthly hydro-power generation (TWh)
- Monthly throughput at Qinhuangdao port (Mt)
- Monthly throughput at Huanghua port (Mt)
- Monthly hot metal production (Mt)
- Monthly metallurgical coke production (Mt)
- Thermal coal supply (Mt)
- Metallurgical coal supply (Mt)
What's included
This report contains:
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