Commodity Market Report

Global metallurgical coal long-term outlook H2 2017: A China story through early 2020s, then India

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Report summary

Most metallurgical coal producers have recently benefitted from high prices.  Now, China has imposed industrial restrictions for their winter season, which should lower import demand in the near-term. However, China is likely to support domestic prices for a few years, which will also help seaborne coals.  Demand will stagnate until India growth takes off after 2025. 

What's included

This report contains

  • Document

    CMS price charts metallurgical trade long-term 2017 H2 data.xls

    XLS 2.12 MB

  • Document

    Global metallurgical coal long-term outlook H2 2017: A China story through early 2020s, then India

    PDF 364.11 KB

  • Document

    Global metallurgical coal long-term outlook H2 2017.pdf

    PDF 1.55 MB

Table of contents

  • Executive summary
      • Demand for metallurgical coal will fall during the Chinese winter heating season
      • BOF steel production in China will hold on to 2017 gains in near term
      • Deleveraging of mining sector in China will continue
      • Expect slower growth rates in steel production, and met coal demand
      • High margins will inevitably bring more tonnes to market
      • Competition will increase in 2018, but prices will find support
      • What does China's 19th Communist Party Congress mean for coal markets?
      • Import demand growth hard to come by
      • Pace of supply depletion will determine market trend
      • Most new mines will reach capacity by 2019
      • Depletion rates increase, but high prices have slowed the trend
      • Russia a wild card
      • Chinese mining restructure should be a net positive for pricing
      • Supply costs are on the rise
      • Forgoing sustaining capital spend for long periods is unworkable
    • Long term picture: greater call for new supply as India grows
    • Usual suspects to benefit from expansion of the trade
    • Costs: Replacement supply comes at a cost, keeping prices higher in the long term
    • High and Low price banding
    • Decarbonisation
    • Maturing Chinese steel and mining policy might act to lower prices in the long term
    • Indian growth rate a challenge to predict
    • Chinese HCC reserve depletion could surprise in the out years
    • Alternate Iron production processes

Tables and charts

This report includes 3 images and tables including:

Images

  • High low contract price ranges: FOB Queensland HCC
  • Seaborne export supply change 2017 versus 2016
  • Change in seaborne exported metallurgical coal supply costs (nominal)

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