Commodity Market Report
Global thermal coal short-term outlook August 2020: more supply cuts are underway
Report summary
An usually stormy August looks to end with Typhoon Maysak, potentially bringing more flooding rainfall to North Asia and delaying the recovery in coal generation into September. Economic coal-to-gas switching window is closing in Japan and South Korea as oil prices make further improvements. However, sentiment remains weak especially in South Korea as its environmental authority seeks to expand winter coal restriction like last year. Glencore’s production cuts announcement marks a long-awaited turning point as Australia's supply response has been negligible for months. We revised down both Australia and Colombia's exports forecast in this update. More cuts from other miners would follow to rebalance the market should prices remain sluggish. China has also tightened domestic supply control which is expected to support domestic price recovery to Rmb590-600/t by the end of 2020, sending a positive signal to seaborne prices.
Table of contents
- General discussion and base case
-
Low case coronavirus scenarios
- Conditions which could induce lower prices:
- China - strong hydro and cooler weather may dampen demand until Q4, but domestic supply has also tightened
- India – generation recovery sign and strong non-power demand will support imports
- Japan and South Korea – coal to gas switching window closes, but heavy rains and winter policy risk rises
- Vietnam – new power plan raises uncertainty over its long-term coal development
- Australia – further production cuts are underway
- Colombia – uncertain operations in September
- South Africa – Anglo America diversify exports market away from India
Tables and charts
This report includes 12 images and tables including:
- Key prices - history and forecast (nominal, US$/t)
- Daily coal use at China’s key generation companies
- Qinhuangdao coal inventory
- India daily power demand growth (YoY%)
- India daily fuel generation mix
- Japan monthly power generation
- South Korea monthly power generation
- Economic coal to gas switching incentives for Japan and South Korea*
- Vietnam’s monthly thermal coal imports
- Vietnam’s thermal coal imports by origin
- South Africa thermal coal exports distribution (%) by top 4 buyers
- Coronavirus low case for Newcastle 6,000 kcal/kg at confidence intervals of 33% and 5% (US$/t)
What's included
This report contains:
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