Commodity market report

Global thermal coal short-term outlook February 2017: China's 276-day policy uncertainty is supporting prices

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Report summary

The Pacific basin supply demand-balance indicates that price decline should appear in April as seasonal Chinese demand declines and the supply restrictions in Indonesia recede. Upward price pressure is expected to emerge in May and last through end of July. Our balance assumes that Colombian producers will continue delivering coal to supply Asia in the same proportions seen during 2016. The Atlantic basin supply demand balance indicates that there will be sufficient coal available during the second quarter, confirming our downtrend price forecast. ARA coal prices will continue declining during the year reaching US$70/t by August 2017 then stabilizing at this level. By the end of 2018, the ARA price is forecasted to reach US$68/t The Newcastle 6,000 kcal/kg NAR spot coal is expected to fall from the US$83/t level of today to US$72/t by the end of 2017.

What's included

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  • Document

    wm coal monthly thermal trade February 2017 v2.xls

    XLS 2.07 MB

  • Document

    Global thermal coal short-term outlook February 2017:China's 276-day policy uncertainty is supporting prices

    PDF 439.77 KB

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    Global thermal coal short-term outlook February 2017:China's 276-day policy uncertainty is supporting prices

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Table of contents

    • Key market data
      • Global Coal Weekly Index History - basis 6,000 Kcal/kg NCV
      • Global Coal Index and Oil Price - basis 6,000 Kcal/kg NCV
      • Atlantic Basin Supply - Demand balance
      • We forecast the price of Newcastle 6,000 kcal/kg NAR spot coal to fall from the US$83/t level of today to US$72/t by the end of 2017. We believe coal price will continue softening and reach $69/t by August 2018 to then recover to US$70/t by the end of 2018. At ARA, the 2017 price decline will be steeper, falling from about US$79/t at time of publication to US$70/t by the end of 2017. We expect the ARA price to continue declining to US$65/ in June before stabilizing and ending 2018 at a seasonally-driven increase to US$68/t.
      • Low quality coals will follow the pattern of high quality Pacific coals. The price of 5,000 kcal/kg GAR Indonesian coal, which had risen tremendously in the last quarter of 2016 on greater demand in China and Indonesian supplier production cuts, will fall from today's US$61/t to US$54/t at end-2017 and US$53/t at end-2018.
      • Key prices – history and forecast, nominal US$/t
    • China' coal capacity policies and targets will shape the domestic and International coal market
    • India thermal coal imports to fall in 2017
    • European demand
    • Indonesia thermal coal exports
    • Australia supply landscape changed by significant M&A
    • Can the US maintain its presence in the Atlantic basin market as EU demand declines?
    • Growth in Colombian exports will stall in 2017

Tables and charts

This report includes 8 images and tables including:

Images

  • Seaborne supply and demand balance
  • Australian thermal export production by company
  • Prices: Image 1
  • Pacific Supply - Demand balance (Mt)
  • Prices: Image 3
  • Prices: Image 4
  • Prices: Image 5

Tables

  • Executive summary: Table 1

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