Commodity Market Report

Global thermal coal long-term outlook H1 2016

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26 May 2016

Global thermal coal long-term outlook H1 2016

Report summary

The seaborne thermal coal market is set to contract for the second successive year. Further downside is not expected though. Costs have swung much lower, with tailwinds of FX support and oil price assistance allied to production efficiencies and steep cuts in labour/other variable costs (where possible). Thermal coal is still a highly competitive source for electricity generation in sizeable markets that matter for thermal trade. The losses have mainly come from outward policy (China, India) but also in smaller markets where carbon price support cut into the cost advantage coal has long had (the UK). The seaborne market does eventually grow, but not back above 2014 levels until the early 2020 timeframe. The only newer supply projects of note come from the Galilee Basin in Australia, but even they are fraught with uncertainty (financial, environmental, risk appetite). 

Table of contents

    • Thermal coal prices past the bottom: low US$40/t range for bituminous coals in early 2016
    • Global economic growth: downgraded, leads to much lower thermal coal growth, particularly in China where coal has peaked
    • Chinese coal supply, demand and imports have all peaked
    • Demand for thermal coal is waning as the world adjusts to post-COP21 NDC commitments

Tables and charts

This report includes 16 images and tables including:

  • Thermal spot price versus 90th percentile cost
  • 90-100% decile of export production (83 Mt)
  • Regional contribution to global GDP growth
  • Revision in global GDP since H2 2015 outlook
  • Global thermal coal demand for power (Mt)
  • Global thermal coal demand for non-power (Mt)
  • Seaborne thermal trade H1 2016 vs H2 2015 (Mt)
  • Coal plant efficiency and emission level by boiler technology
  • Change in seaborne high rank thermal coal supply by period and country (Mt); 644 Mt in 2016
  • Change in seaborne low rank thermal coal supply by period and country (Mt); 237 Mt in 2016
  • Seaborne export cost curves 2016 (energy adjusted)
  • Seaborne export cost curves 2035 (energy adjusted)
  • Working through global overcapacity (Mt)
  • Price forecasts 2016-2022
  • New Australian projects required from 2023
  • Price forecasts 2016-2035

What's included

This report contains:

  • Document

    CMS Thermal Coal Prices data May VF.xls

    XLS 2.26 MB

  • Document

    WM CMS Thermal Slidepack May 2016 VF.pdf

    PDF 2.74 MB

  • Document

    Global thermal coal long-term outlook H1 2016

    PDF 876.30 KB

  • Document

    Global thermal coal long-term outlook H1 2016

    ZIP 3.97 MB

  • Document

    Executive summary

    PDF 716.50 KB

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