Global thermal coal short-term outlook May 2020: lockdowns are ending, is there a recovery in sight? Report

Commodity Market Report 28 May 2020

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Report summary

Lockdowns around the globe ended in May and the results were immediate. Power demand improved throughout the month for every major country for which we track. The difference between the first and second half of the months could not be starker. Newcastle 6,000 prices fell below the US$50/t mark early in the month as demand bottomed out, a price not seen since 2016. However, in the last two weeks the extraordinary increase in Chinese thermal coal burn signalled a small, but meaningful rally for coal. Major benchmark prices finished the month up 7-17% from their lows and Newcastle 6,000 returned above US$50/t. A turn-around in the global economy may be emerging but it is not out of the woods yet. We expect global GDP to contract 4% this year – the worse recession since the Great Depression. Stimulus packages being launched will only serve to soften the recession, not prevent it. All of this means another few months of weak pricing and demand.

General discussion and base case
Low case coronavirus scenarios
- Conditions which could induce lower prices:
China
India
South Korea and Japan
Europe
North Africa
Colombia
Australia
Indonesia
South Africa
Russia

Tables and charts

This report includes 7 images and tables including:

Key prices - history and forecast (nominal US$/t)
China seaborne thermal imports and price arbitrage between QHD and Newcastle 5,500 HA (as of 22 May)
Daily coal consumption of the six largest gencos in the coastal region (as of 22 May 2020)

India daily power demand (as of 25 May)
Japan power demand (weekly)
South Korea power demand (monthly*)
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_monthly_thermal_trade_may_2020.xlsx

XLSX 436.98 KB
Global thermal coal short-term outlook May 2020: lockdowns are ending, is there a recovery in sight?

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