Commodity Market Report
Global thermal coal short-term outlook October 2020: China-Australia trade tensions distort the market
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*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
Political trade tensions heated up between Australia and China this month, as the Chinese government instituted a ban on Australian coal imports. The ban stoked confusion in the market as warnings were given to buyers with no mention of an end date and some Australian cargos were still being offloaded at some ports. There were reports of Chinese buyers cancelling previously booked contracts intended for late in the year delivery. The trade dispute caused distortions in the seaborne coal market, with a mid-month fall in Newcastle thermal prices and significant gains in Russian and Indonesian coal prices, as an alternative import supply. Newcastle prices were able to see some recovery toward the end of the month, with increasing demand from Japan and South Korea as North Asian LNG prices spiked. Indian coal buyers have also helped serve as an alternative outlet for Australian supply.
Table of contents
- General discussion and base case
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Low case COVID-19 scenarios
- Conditions which could induce lower prices:
- China – peak winter demand and additional quotas offer upside to imports
- India – higher petcoke prices could spur greater thermal coal imports
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Japan & South Korea – higher LNG prices reduce switching threat to coal
- Japan
- South Korea
- Europe – lockdown restrictions dampen coal gains in October
- Turkey – Taman Port shipments create a challenge for Colombian coal
- Australia – impacts of the ban unfold
- Indonesia – exports may struggle to catch up in Q4
- Colombia – record breaking strike may force parties into arbitration
- Russia – rail capacity risk
Tables and charts
This report includes the following images and tables:
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Key prices - history and forecast (nominal, US$/t)Qinhuangdao port stocksIndonesia coal productionCOVID-19 low case for Newcastle 6,000 kcal/kg at confidence intervals of 33% and 5% (US$/t)
What's included
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