Commodity Market Report

Thermal coal markets short-term outlook November 2021

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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.

Table of contents

  • 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
    • 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)

What's included

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    Thermal coal markets short-term outlook November 2021

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