Global coal supply summary: sustained higher prices push up cost and margin

Persistent higher average coal prices in 2017 have put an end to a declining cost trend, which occurred from 2012 to 2016. We estimate a 9% year-on-year rise in total average cash costs for seaborne export thermal coal and an increase of 16% for metallurgical coal in 2017. This is driven by higher royalties, rising strip ratios and a rebound in diesel prices. Margins for seaborne exporters have also risen sharply in 2017. We estimate average thermal coal margins at US$21/tonne in 2017, increasing 63% on 2016. Metallurgical margins have more than doubled to US$82/tonne.