Global thermal coal short-term outlook June 2020: tepid recovery with many economies easing restrictions Report

Commodity Market Report 30 June 2020

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Report summary

There were signs of life returning to the coal market over the last month as economies continue to emerge from strict coronavirus shutdowns and summer heat takes over the Northern Hemisphere. Heat waves and reduced nuclear availability sent coal generation climbing across Asia in June. New coal-fired units were brought on in Germany and Japan, with another scheduled to be commissioned in Japan in July. Despite easing of virus containment restrictions across the world, there has not been a rush back to normal life. Recovery has been tepid and spotty as coronavirus cases are rising again in some areas. Coal generation and industrial demand remain weak when compared to 2019 levels and governments are turning further inward to protect domestic economies. In China, import quota restrictions have tightened and cargos were turned away, despite quickly rising domestic coal prices due to domestic supply constraints.

General discussion and base case
Low case coronavirus scenarios
- Conditions which could induce lower prices:
China - opportunity for seaborne imports stifled by import quota uncertainty
India – outbreak restrictions easing but coal demand has yet to fully recover
- Proposed amendments through Electricity (Amendment) Bill 2020 could reshape power sector future in India
- India opens up commercial coal mining for the private sector after about 50 years
South Korea and Japan – coal-gas switching risk lessened by rising oil price
Taiwan – perfect timing to rebuild coal stockpiles
Vietnam – record high coal generation
Europe – distressed LNG supply continues to challenge coal generation
Australia – steady outlook but a virus-related demand risk
Indonesia – supply cuts occurring, but more could be required
Colombia – Cerrejon continues to face challenges
Russia – supply disruption fails to offset weak demand
South Africa – supply disruption not enough to lift prices
Canada – one of two thermal remaining coal mines closes

Tables and charts

This report includes 3 images and tables including:

Key prices - history and forecast (nominal US$/t)
Coal use – six largest gencos in coastal China
Coronavirus low case for Newcastle 6,000 kcal/kg at confidence intervals of 33% and 5% (US$/t)

What's included

This report contains:

wm_coal_montly_thermal_trade_June_2020.xlsx

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Global thermal coal short-term outlook June 2020: tepid recovery with many economies easing restrictions

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