The coal mining industry was slow in 2016 to increase production in response to demand stimulation. The slow response caused a substantial increase in seaborne prices. Quickly boosting output is undoubtedly difficult following three years of declining prices during which miners slashed costs to conserve cash. Should producers rehire laid off-staff, redeploy equipment and restart mines that were recently mothballed or idled? They face the difficulty of assessing the duration of the current price spike.
Many factors are at play, but China’s de-capacity policy is clearly at the centre of the issue. As events unfolded, there was a timely shift of the marginal cost supply by portfolio players, an increase in spot-price-driven shipments over previous years, miner inflexibility owing to years of cost-cutting and a producer reticence to expand without clear understanding of the price future. Increasing flexibility to handle price changes is a skill worthy of producer development.
This report includes 2 file(s)
Happy days in coal country: back in the money! PDF - 504.18 KB 11 Pages, 0 Tables, 10 Figures
prices final.xls XLS - 226.00 KB
This Coal Insight report highlights the key issues surrounding this topic, and draws out the implications for those involved.
Participants, suppliers and advisors can use it to look at the trends, risks and issues within the coal industry and gain an alternative point of view when making decisions.
Wood Mackenzie is the only coal industry service provider that offers a market outlook integrated with other sector analyses, including macroeconomics, coal supply, steel markets and gas and power markets.
Our coal analysts are based in the markets they analyse. They work with objective, proprietary data to help you maximise your current and future decision making. From market dynamics to trade patterns, we give you confidence in your strategic planning.
Wood Mackenzie's clients include every major player in the global energy, metals and mining industries. We are recognised as a leading authority by international and national energy, metals and mining companies, leading financial institutions, governments and government agencies. We work with a range of diverse teams within our clients, from strategy and policy makers, business developers and market analysts, through to corporate finance, risk teams and investors.
Having Wood Mac analysis is table-stakes. Others are nice to have.
Analyst Metal Mining Producer
Wood Mac has the highest quality data and is demanded by our staff.
Portfolio Manager Integrated Oil Company
Others can provide data but we value the quality of the Wood Mac analysis above other sources.
As the trusted source of commercial intelligence for the world's natural resources sector for more than 40 years, we empower clients to make better strategic decisions with objective analysis and advice. Find out more...
Insight | Oct 2016
Happy days in coal country: back in the money!
Have questions? Just let us know how to contact you and we will respond to you as soon as possible.