Commodity Market Report
Global thermal coal short-term outlook August 2019: are we at the bottom?
Report summary
Newcastle benchmark broke the US$60 level this week, reminding us of the tough fight against China’s structural overcapacity three years ago. But this time, LNG was to blame. Significant oversupply of gas witnessed since Q1 and LNG storage overhang added coal destocking pressure in Europe. Distressed Russian coal competing into Asia amid strong non-fossil fuel generation in North Asia pushed Asian prices down at a greater scale than ARA which already reached a record low two months earlier. Although the supply wave of LNG has not stopped yet, nuclear maintenance schedule and winter demand should provide some near term price support to both gas and coal. Strong Chinese imports this year is likely reaching its 2018 level amid attractive import price arbitrage, but the lingering trade-related uncertainty has put the wheels of a global slowdown in motion. We expect further supply responses to take place as we survive more demand uncertainties next year.
Table of contents
- China – price arbitrage supports imports despite domestic protectionism risk
- India – post-election economic weakness and strong renewables temper coal demand
- South Korea – near-term recovery amid nuclear maintenance and ease of curtailment
- Japan – nuclear availability a near-term risk
- Germany – strong renewables hurt coal generation further in summer
- Malaysia – new coal-fired power units drive near-term imports growth
- Vietnam – low-cost seaborne supply displacing high-cost domestic production
- Australia – more project delays but growing high-CV exports for the rest of 2019
- Indonesia – higher exports year-on-year but lower contribution for the rest of 2019
- Colombia – production profile at risk amid low prices
- Russia – exports will decline as western demand falls in the near term
- South Africa
- Mozambique
Tables and charts
This report includes 3 images and tables including:
- Coal-based power generation
- Monthly generation by fuel type (January-August)
- Total Russian coal exports forecast comparison by destination (including met and thermal, seaborne and landborne)
What's included
This report contains:
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