Commodity Market Report
Global metallurgical coal short-term outlook July 2020: China import constraints dampen positive sentiment
Report summary
Markets remain in suspended animation with spot demand floundering despite some positive signals from steel markets: China's stricter port limits reduced demand for August lay-cans and demand elsewhere was met mostly through contract tonnes and stockpiled coal, rather than new spot deals. But after 4 months of low demand, supplies are also starting to dry up. A second wave of US cut backs is beginning, and multinational miners are flagging lower output for the next 12 months. Conditions for a recovery are ripening, but participants will have to wait. We still expect Q4 to bring higher prices as growing demand intersects with reducing supply. China's buyers will have more competition by year's end and will respond by paying more. As ever during the pandemic, surging virus cases in India and Brazil - plus flare-ups elsewhere - are keeping anxiety levels high. Divergence in prices from our base case could be very high if major second waves in major markets bring broad economic harm.
Table of contents
- Base Case
- China weakness - a drag on prices in Q3
- Broad recovery in import demand underpins stronger end of year markets
- Low case: Virus resurgence and Chinese import restrictions undermining confidence
- Australia: Second quarter production shows signs of improvement, while the outlook worsens
- Australia: Carborough Downs briefly suspends its longwall due to a gas ignition
- US: Rhino Resources declares bankruptcy
- US: Ramaco idles Berwind
- US: Robindale Energy idles Maple Springs
- Russia: Eastbound rail constraining opportunities
- Mozambique: Moatize suspends its coal preparation plant for the month of June
- China: steel sector to weather low summer steel demand
- China: Tightened import restrictions hurting Australian traded volumes
- Mongolia: exports to China to recover in H2
- China: Rain-soaked construction sector undermines domestic coking coal prices
- SEA: Steel exports to China fuelling a strong rebound
- South Korea: Demand recovering nicely
- Europe: stimulus package overshadows lacklustre summer demand
- India: Recovery continues in Indian crude steel production
Tables and charts
This report includes 7 images and tables including:
- Key prices - history & quarterly forecasts (US$/t nominal)
- Australia met coal production reported by company (Mt)
- BMA quarterly production (Mt)
- Global and Chinese crude steel production (Mt)
- Crude steel production – Ex-China producers (Mt)
- Global and Chinese blast furnace hot metal production (Mt)
- Blast furnace hot metal production – Ex-China producers (Mt)
What's included
This report contains:
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