Commodity Market Report

Global metallurgical coal long-term outlook H2 2018: Challenge for supply as demand grows

Robin Griffin

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Why buy this report?

  • Get coal price forecasts and analysis of the factors that will influence price to 2040.
  • Get supply, demand and market analysis from our global team of experts, including the restructuring of China's coal mining sector and the challenges faced by Australia, the US and Canada in meeting demand.  
  • Get access to the analysts who produced this report to understand what the analysis could mean for your business. 

Scroll down for a full table of contents, as well as all the charts and data sets you'll receive. 

What's changed since our H1 2018 update?

Our view of major price trends has not changed markedly since our last update. However, we have made some changes to reflect differences in our forecast of supply and demand. We still expect prices to fall from their current highs in the medium term; but, we have slowed the decent towards the cost of global supply by one year. This change means that HCC prices will on average stay above US$150/t until 2023. The change reflects our view that supply of premium HCC will take longer to expand and meet the global need than we had previously forecast.

12 December 2018

Global metallurgical coal long-term outlook H2 2018: Challenge for supply as demand grows

Report summary

China's unique restructure of its steel and coal sectors has transformed the recent prospects of the world's coal suppliers. But what happens if China's objective's change, and when demand for coke and coking coal inevitably begins to fall? Fortunately, the pursuit of better environmental outcomes and the quality of international coals will insulate the seaborne trade from falling demand in maturing economies in north Asia, at least through the next decade. But most importantly, Indian growth will help push the metallurgical coal trade above 400 Mtpa by 2040. With suppliers of premium hard coking coal already struggling to sustain production growth, the potential of future supply shortages is high. Prices are likely to remain above the marginal cost of global supply in the long term.

Table of contents

  • Introduction
  • Changes to our forecast
  • 2018 – 2020: Fundamentals show little change
  • 2020-2023: Price transition
  • 2024-2030: Prices flirt with the marginal cost of supply
  • 2030-2040: Reserve depletion takes precedence
  • PCI and semisoft prices temporarily reverse valuations
  • US prices will have a mixed relationship with the Australian LV price
  • Long-term demand trends
  • India
  • China's megatrend of declining steel, coke and coal demand still holds
  • Import demand into China supported by coastal shift of mills and emissions reduction drive
  • Increasing blast furnace size will entrench lower coke rates and higher CSR
  • Near Term
  • Downside: Trade dispute and import cap
  • Upside: Environmental restrictions on coal mining
  • Mid- and long-term
  • Downside: China's shrinking metallurgical coal demand
  • Downside: Accelerated decarbonisation of the steel sector
  • Downside: India's recent successes might not be sustained
  • Neutral: India's coking coal supply
  • Alternative iron production processes

Tables and charts

This report includes 8 images and tables including:

  • HCC Demand comparison H2 versus H1
  • HCC Price forecast comparison
  • Hay Point vs Chinese domestic pricing
  • HCC Supply by status
  • Seaborne HCC incentive price curve
  • Supply change 2018 to 2040
  • Consolidation in the Indian steel sector
  • Long term steel production in China by type

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