Commodity Market Report
Global thermal coal short-term outlook July 2020: second virus wave clouds demand outlook
Report summary
The Northern Hemisphere experienced an unusual summer into July where heavy rains and flooding offset heating demand strength. Fears over a second pandemic wave in key markets, especially Japan, slowed down the recovery in power demand. Improving domestic production and stock levels in China means there is no rush to relax its import restriction quota. India is yet to see a rebound in power demand, forcing coal miners to compete into the only market that registered robust growth in Q2 - Vietnam. While production cutbacks in Colombia, Russia and US have strained supply for Europe, response from Australia was almost muted. Indonesia miners made an effort to cut production, but they have little impact in the high CV coal markets where risk of a second wave of coronavirus has dampened demand.
Table of contents
- General discussion and base case
-
Low case coronavirus scenarios
- Conditions which could induce lower prices:
- China - summer power demand growth offset by strong hydro and domestic supply
- India – pressure remains in the power sector, but non-power demand improving
- South Korea – higher-than-expected nuclear availability could weigh on coal
- Japan – demand recovery slows amid a resurgence of new coronavirus cases
- Vietnam – imports remain strong amid limited coronavirus impact
- Australia – supply response is muted despite growing scale of loss-making operations
- Indonesia – expect more production cuts amid weak demand
- Colombia – Prodeco may remain closed for four years
- Russia – Europe shipments pick up amid the recovery in ARA
- Mozambique – Moatize operation continue with a lower production rate
Tables and charts
This report includes 7 images and tables including:
- Key prices - history and forecast (nominal, US$/t)
- Daily coal use at China’s key generation companies
- Qinhuangdao coal inventory
- Japan monthly power generation
- South Korea monthly power generation
- Operating margin for Australia high ash and low CV production at spot prices
- Coronavirus low case for Newcastle 6,000 kcal/kg at confidence intervals of 33% and 5% (US$/t)
What's included
This report contains:
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