Commodity Market Report

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

Robin Griffin

12 December 2018

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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.

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.

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

What's included

This report contains:

Global_metallurgical_coal_long-term_outlook_H2_2018.pdf

PDF 1.39 MB
Global metallurgical coal long-term outlook H2 2018: Challenge for supply as demand grows

PDF 999.47 KB
Global metallurgical coal long-term outlook H2 2018: Challenge for supply as demand grows

ZIP 2.65 MB

CMS_data_metallurgical_trade_long_term_outlook_2018_H2.xlsx

XLSX 18.33 MB
CMS_data-pivot_view-metallurgical_trade_long_term_outlook_2018_H2.xlsx

XLSX 3.14 MB
cms_price_charts_metallurgical_trade_long-term_2018_h2.xls

XLS 2.14 MB