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Coronavirus demand loss catches up with coal sector: week ended 24th April
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Report summary
The scouring effect of weeks of poor steel and power demand in India, the EU and north Asia has finally undermined prices for metallurgical and thermal coal. Supply constraints in steel and iron ore - including covid-related shutdowns - have kept prices for those commodities stable. But coal has been relying on China’s makeshift support, and that dissipated last week once restocking ended. Prices for met coal collapsed back to marginal costs, and thermal coal plumbed new depths as oil and gas prices languish at record lows. Encouraging signs of renewal in power demand, amid a partial easing of lock downs, suggest markets will improve. But supply adjustments and a run-down in stock levels are required if coal prices are to rise in the near term. China may yet play a pivotal role, with production cut-backs likely in coming weeks. Meanwhile a glut of most coal types looks likely to make things worse before they get better.
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