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Global metallurgical coal long-term outlook H2 2015

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23 November 2015

Global metallurgical coal long-term outlook H2 2015

Report summary

Excess capacity in the Chinese and global steel value chain will dominate the metallurgical coal market for the foreseeable future. China's steel production will remain at or below 2014 levels until 2022, with hot metal and metallurgical coal demand starting a structural decline. For most of the period to 2022 contract prices and spot prices - included for the first time - will remain in step with trends in marginal costs of Australian metallurgical coals. The long term future of metallurgical coal demand continues to rely on the eventual acceleration of demand growth in India.  The potential remains huge but the improvement in investment environment, and the reform, required to make it happen will take time.  Only then will coal prices begin a more sustainable rise.  

Table of contents

    • Prices
      • Supply growth has reached a turning point
      • Price rises in 2018 will be short-lived
      • Spot prices will remain close to the marginal cost of Australian supply through to 2022
      • Long-term market performance more reliant than ever on India
      • China is a growing source of concern
      • Lower demand/improved expansion options reduced overall demand for new projects
      • Weaker supplier currencies and efficiency gains have shifted the cost curve downward
    • Risks
      • The reform of industrial overcapacity in China may take longer-than-expected
      • Will metallurgical coke exports remain high?
      • The future for Chinese metallurgical coal producers is opaque
      • India needs to deliver substantial infrastructure

Tables and charts

This report includes 14 images and tables including:

  • Contract met coal prices FOB (US$/t Real 2015)
  • Spot HCC prices - CFR China and FOB Australia
  • HCC supply-demand balance and contract price to 2025
  • Indian steel consumption outlook to 2035
  • Comparison of India's government deficit
  • Global HCC supply versus demand (Mt)
  • Low vol HCC marginal costs 2015 - 2035 (US$/t)
  • HCC incentive price curve (at 15% IRR)
  • HCC market balance and contract price to 2035
  • China import coal demand H2 versus H1
  • Global HCC trade comparison H2 versus H1
  • HCC supply versus demand – H2 versus H1
  • LV HCC Marginal cost change - H2 minus H1
  • Price forecast change - H2 versus H1

What's included

This report contains:

  • Document

    cms met coal prices data november.xls

    XLS 497.50 KB

  • Document

    CMS Metallurgical Coal LTO H2 2015.pdf

    PDF 1.87 MB

  • Document

    Global metallurgical coal long-term outlook H2 2015

    PDF 367.89 KB

  • Document

    Global metallurgical coal long-term outlook H2 2015

    ZIP 1.97 MB

  • Document

    Executive summary

    PDF 208.25 KB

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