Thermal coal markets short-term outlook November 2021 Report

Commodity Market Report 30 November 2021

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Report summary

Thermal coal markets took the first half of November to find their feet from rapidly falling coal prices induced by China's price controls. The modest bounce in coal prices from mid-month seemed to cast one eye to the surge in Delta cases and restrictions in Europe, while Omicron's arrival and possible further intervention by the NDRC were enough to spoil the recovery. Newcastle thermal coal prices are likely to trade lower through December, but with ongoing volatility. Prices will remain elevated owing to seasonal demand strength and various supply concerns.

General discussion and base case
Breakeven cashflow suggests price support at US$80/tonne
High/low scenarios
China: Australian coal comes back
India: Softness in seaborne prices and strong demand set to revive imports
South Korea: Impact of winter curtailment will be mild this year
Vietnam: Weak power demand in the south hurts imports
Europe: Coal and gas supply shortages expected to keep prices high
Global: Cashflow to stay strong in months ahead
Australia: Near term outlook revised lower on wet weather, flooding
- Supplier update
Indonesia: lower output in November
Russia: Amajor accident at a Kuzbass mine could raise supply risk
Colombia: Election frontrunner could pose hurdles for future coal production

Tables and charts

This report includes 13 images and tables including:

Key prices - history and forecast (nominal US$/t)
2021 Breakeven prices (Newcastle 6,000 nar benchmark equivalent)
Low and high cases for Newcastle 6,000 kcal/kg at confidence intervals of 5%, 33%, 66% and 95% (US$/t)

India coal fired generation
India coal supply and power sector stocks
Power generation vs fossil fuel share %
South Korea coal-to-gas switching
Operating cashflow at November 2021 averages (operating margin less sustaining capex)
Australia thermal coal exports
La Niña risk – a look back at 2009-12
Indonesia coal production and exports (Mt)
Indonesian mines 7 day average rainfall (mm/week)