Global thermal coal short-term outlook September 2020: Chinese buyers make a bet on quota easements Report

Commodity Market Report 30 September 2020

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Report summary

Thermal coal markets appeared to have turned a corner in September, as prices strengthened across the board. While we expect this trend to continue towards the end of this unusual year, much will again depend on China’s policy around domestic coal pricing and import quotas. With Chinese domestic supply tight and peak winter coal demand quickly approaching, will the Chinese government tolerate domestic prices in the “red” band (above RMB 600/t) or release additional import quotas? Will coal imports still be capped at 2019 levels or will more be allowed in if there is a winter demand spike?

General discussion and base case
Low case COVID-19 scenarios
- Conditions which could induce lower prices:
China – tight domestic supply ahead of winter peak demand season
India – imports supported by industrial demand recovery and higher petroleum coke prices
Europe – stronger coal generation expected in Q4
South Korea – switching threat abated for now
Bangladesh – increasing coal-fired capacity
Australia – supply cuts underway
Indonesia – producers under cost and margin pressure
Colombia – Cerrejon on track for a record long strike
Russia – supply disruption fails to offset weak demand

Tables and charts

This report includes 3 images and tables including:

Key prices - history and forecast (nominal US$/t)
Indonesia coal production
COVID-19 low case for Newcastle 6,000 kcal/kg at confidence intervals of 33% and 5% (US$/t)

What's included

This report contains:

wm_coal_montly_thermal_trade_September_2020.xlsx

XLSX 494.70 KB
Global thermal coal short-term outlook September 2020: Chinese buyers make a bet on quota easements

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