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Global thermal coal short-term outlook August 2018: prices driven by increased supply and FX rates

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30 August 2018

Global thermal coal short-term outlook August 2018: prices driven by increased supply and FX rates

Report summary

In August, there was a significant appreciation in the value of the US dollar against a basket of key coal producing countries. Depreciating currencies from these suppliers have meant lower costs for these countries to export coal in US dollar terms. FX rate fluctuations along with increasing coal supplies is putting downward pressure on prices. Wood Mackenzie projects that Newcastle 6,000 kcal/kg will fall to US$88/t by the end of the year. However, in the first half of the year, demand has been stronger than expected.  If imported coal demand continues to surprise to the upside, prices may remain strong throughout the remainder of 2018.

Table of contents

  • Executive summary
    • Glencore concludes additional Japanese utility price negotiations
    • Australian 6,000/5,500 kcal/kg NAR spread reaches new high before starting to close
    • Tariff volley return: China raises tariffs on US coal imports
    • Turkish currency crisis
    • Price outlook
    • China
      • Record provincial electricity consumption proxy for national demand
      • Record thermal coal burn for H1 but supply questions linger for H2
      • Push to decrease import clearance timelines for coming winter
    • India: on the hunt for critical coal as domestic supply fails to deliver
    • Japan
      • Nuclear power's return to hamper coal demand in Q4 2018
      • New coal plant projects challenged
    • South Korea
      • Illegal coal shipments received from North Korea
      • New nuclear reactors could weigh on coal imports
    • Europe: robust coal use in Germany despite continental renewable strength
    • Ocean freight: Baltic Dry Index on the rise
    • China
      • Record month for China Coal Energy despite inspections
      • Guizhou mine inspection frequency likely to increase
    • Indonesia: government revises 2018 total coal production plan up by 100Mt
    • Australia
      • Aurizon increases 2018/2019 coal forecast with a big caveat
      • Aurizon's Hunter Valley rail corridor hit by 28 hour strike action
      • As ship queue hits one month at Dalrymple Bay, finger pointing ensues
    • Russia
      • All quiet on the eastern rail front as coal rolls on
      • Eastern rail system expansions on the horizon
    • Colombia: pro-coal President Duque sworn in as president
    • Canada: coal terminal back on the block
    • US
      • Thermal exports remain strong
      • US introduces a new carbon regulation proposal

Tables and charts

This report includes 6 images and tables including:

  • Key market data
  • Executive summary: Table 2
  • Spread between Newcastle NAR 6,000 kcal/kg and high ash NAR 5,500 kcal/kg
  • FX rate movements (last three months)
  • Key prices – history and forecast (nominal, US$/t)
  • Indonesian coal sales by market

What's included

This report contains:

  • Document

    wm coal monthly thermal trade Aug 2018.xls

    XLS 2.92 MB

  • Document

    Global thermal coal short-term outlook August 2018: prices driven by increased supply and FX rates

    PDF 932.36 KB

  • Document

    Global thermal coal short-term outlook August 2018: prices driven by increased supply and FX rates

    ZIP 2.96 MB