Commodity Market Report
Global thermal coal short-term outlook February 2020: COVID-19 impacts begin to unfold
Report summary
Global coal markets are watching the development of the coronavirus (COVID-19) outbreak in China and its recent spread to multiple other countries in Asia and Europe. In China, both thermal coal demand and supply struggled throughout February. Demand was impacted more, while supply recovery gained momentum towards the end of the month. The full impacts of the virus outbreak in China and elsewhere are yet to transpire. In this report, we examine the dynamic effects on the seaborne coal demand and prices, and discuss a downside scenario of a protracted recovery in China and the outbreak spreading globally. How would our base case outlook for coal prices change if the market impacts from COVID-19 are worse than expected?
Table of contents
- General discussion and base case
-
Low case COVID-19 scenarios
- Conditions which could induce lower prices:
- Glencore and Tohoku start negotiations for term JPU contracts
- China – supply tightening amid outbreak disruptions
- India, Pakistan and Bangladesh – mixed signs for seaborne coal
- South Korea – environmental curtailments continue
- Japan – coal-fired capacity still growing but uncertainty over virus impacts remains
- Malaysia – full commissioning of TNB’s JEP plant to support imports growth in 2020
- Europe – strong renewables and COVID-19 impacts depress coal further
- Australia – steady outlook but a virus-related demand risk
- South Africa – supply tightness continues in February
- Indonesia – potential supply curbs amid weakening demand
- Colombia – challenges internally and externally at Cerrejon
- Russia – exports drop amid low European prices and weather impacts in the East
Tables and charts
This report includes 3 images and tables including:
- Key prices - history and forecast (nominal, US$/t)
- Daily coal consumption of the six largest gencos in the coastal region
- COVID-19 low case for Newcastle 6,000 kcal/kg at confidence intervals of 33% and 5% (US$/t)
What's included
This report contains:
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