Commodity Market Report

Global thermal coal long-term outlook H1 2018: navigating through the energy transition

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20 June 2018

Global thermal coal long-term outlook H1 2018: navigating through the energy transition

Report summary

Current markets will eventually cool,  but the timing is highly dependent on the pace of reform and growth in China and India. Absent satisfactory reform in China and India, their domestic supply competitiveness will be as, if not more important, than demand.  The long-term outlook for thermal coal demand remains challenging, though. We expect three regionally-distinct, non-uniform and often conflicting trends to drive thermal coal:     the growing demand for electric power,  a desire to reduce air-pollution and lower greenhouse gas emissions, and  the cost of consumption alternatives to coal.

Table of contents

  • Executive summary
    • Phase I: gradual return to marginal costs (2018 – 2021)
    • Risked price ranges
    • Global thermal coal demand will continue to decline from its 2013 peak
      • China
      • India
      • Japan, South Korea, and Taiwan
      • Southeast Asia
      • EMEARC and the Americas
    • Variable import demand requires flexible supply: overcapacity is here to stay
    • Mining costs slowly rising
    • Global port loading capacity adequate until 2027, then new regional capacity needed
    • Dry bulk seaborne trade growth has balanced the market, however, risks remain as new environmental restrictions are enforced
  • Risks and uncertainties

Tables and charts

This report includes 25 images and tables including:

  • Phase I marker coal price forecast, real 2018 US$/t
  • 2018-2019 global seaborne trade balance
  • Thermal spot price versus 90th percentile cost
  • Phase II marker coal price forecast, real 2018 US$/t
  • Seaborne demand versus supply status (Mt)
  • Supply gap vs FOB Newcastle market price (Mt, US$/t)
  • Thermal coal price forecast, FOB (US$/t, real 2018)
  • Thermal spot price forecast, delivered (US$/t, real 2018)
  • Phase III marker coal price forecast, real 2018 US$/t
  • Benchmark thermal coal incentive price at 15% IRR (US$, FOB Newcastle, real 2018)
  • Phase IV marker coal price forecast, real 2018 US$/t
  • High low price ranges: FOB Newcastle
  • High low price ranges: CFR ARA
  • Global thermal coal demand for power (Mt)
  • Global thermal coal demand for non-power (Mt)
  • Seaborne thermal coal demand by region (Mt)
  • Seaborne thermal coal demand change by region (Mt)
  • Seaborne export cost curve 2018 (energy adjusted)
  • Seaborne export cost curve 2040 (energy adjusted)
  • Seaborne thermal coal supply by country (Mt)
  • Cumulative change in seaborne thermal coal supply by year from 2018 levels (Mt)
  • Baltic Index from 1984
  • Baltic Index from 2013
  • Dry bulk Seaborne trade (Mt)
  • Ocean freight rates for main ocean freight routes (Real 2018 US $)

What's included

This report contains:

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