Commodity Market Report
Global metallurgical coal long-term outlook H2 2020: A year of seismic change, but the future is built on firm foundations
Report summary
Global economies chartered a recovery path in the second half of 2020 with met coal in tow. Geopolitical tensions boiled over, leading to a ban on Australian coal into China, derailing trade. While these issues are current, we provide caution as they will be relegated to the history books when evaluating long term market trends. Recovery, albeit rebased lower, is in the cards for 2021 and beyond. Ultimately, the next several years remain in the hands of China, transitioning to a lower growth and steel intensive economy. Indian demand takes the reins from China long term. Hydrogen based steel will test coal-based steel as projects nip at the edges of demand. Expect real growth in green steel beyond our forecast. Our latest forecast shifts out to 2050. The additional 10 years reveal a widening gap between demand and operating mines – particularly for high quality coals. High prices will be required to incentivise development of deeper, costlier and likely more controversial mines.
Table of contents
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Key considerations
- The China import ban will play a minor role in the future state of markets
- Covid legacy a hiatus for demand rather than a long-term drag
- Decarbonisation an existential threat, but caution required
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H2 2020 forecast at a glance
- DEMAND
- SUPPLY
- Covid-19 impacts on forecast
- Decarbonisation and green steel considerations in base case
- Base case scrap use
- Hydrogen-based DRI
- Hydrogen replacement of PCI
- H2 2020 price forecast overview
- Forecast breakdown
- 2020-2025: China a drag on seaborne prices after broad recovery
- 2025-2030: Power shift as India grows, and premium supply comes under pressure
- 2031-2040: Fundamentals positive despite concerns for the future
- 2041-2050: Metallurgical coal under pressure but prospering
- Key trends
- Supply forecast overview
- Australia
- United States
- Canada
- Russia
- Indonesia
- Mozambique
- Overview
- Opportunity knocks for semi-soft coking coals but faces competition from semi-hards
- PCI in high demand long-term, but pricing is fragile
Tables and charts
This report includes 13 images and tables including:
- Queensland HCC Benchmark - US$/t (real 2020$)
- Breakeven curve
- Total cash cost curve
- HCC demand versus operating capacity
- Incentive price curve (15% IRR, real 2020 terms)
- Supply change by coal type and %
- Supply change 2030 to 2050
- Global crude steel production
- Global BOF steel production
- Global EAF steel production
- Long-term Indian crude steel, hot metal, coke production and coal imports
- Long-term Chinese crude steel, hot metal, coke production and coal imports
- Demand change 2020 to 2050
What's included
This report contains:
