Commodity Market Report
Global metallurgical coal short-term outlook November 2020: Australian coal exporters forced to contemplate life without China
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*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
China’s unofficial ban on Australian imports remains resolute and is causing enormous disruption. Coal price differentials are testing new boundaries - Chinese CFR prices are now over US$60/t above FOB Australian prices. The ban comes as China and Australia endure a broader geopolitical dispute , worsened in recent months. Optimists point out that the night is darkest just before dawn, but there is little to hold on to for those looking for signs of a looming sun rise. We now expect the disruption to continue into 2021. Most market players are being hurt by the ban - Australian sellers seeing prices fall, while Chinese buyers pay more for inputs. The strong performance of ex-China markets, and a positive outlook for a stimulus and vaccine-driven 2021, will be unable to influence Asian prices during the ban. Read on for our latest thoughts on the impacts to date, the length of the ban, and how prices might respond.
Table of contents
- Coronavirus update: Month ended November
- Chinese authorities tighten control over Australian cargo movements
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Current state-of-play
- Price relativities testing new boundaries
- Trade flows are beginning to shift
- US and Canadian contract coals add or elevate spot sales
- Few trade participants seem to be benefiting
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Outlook: End of Australian ban will reverse October's dramatic turnaround
- How long will the ban last ?
- How will pricing dynamics play out?
- Fate of ships currently queuing determines near - term price lows
- Rejigged trade will allow FOB Australia prices tostabilise
- End of ban could see a rapid correction in prices
- Lingering loss of seaborne demand
- Low case: Australia's big freeze takes time to thaw
- High case: A rapid ban reversal and La Nina leads to shortages
- Australia: Queensland’s met coal throughput down in Oct, with a softer outlook for the remainder of the year
- China: domestic coking coal supply to increase in Q1 but will it be enough?
- Some US vessels begin to move to China, but we expect a limited increase
- Canada: Australia’s coal ban loss is Canada’s gain
- China: Busy end to 2020 sets up path for new growth
- India: strong crude steel production drives metallurgical coal imports higher
Tables and charts
This report includes the following images and tables:
- Infection rate versus hot metal production
- Cost versus spot price (US$)
- Queensland ports: Metallurgical coal exports (Mt per month)
- Australia monthly coal exports to China
- Australia monthly met coal exports to China
- Ridley Terminals Metallurgical Coal exports by month
- 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)
- Key prices - history & quarterly forecasts (US$/t nominal)
What's included
This report contains:
