Thermal Coal Market

July 14, 2017

The Research Team gives its view on the thermal coal market

 

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10 July 2017 

  • Our assessment of the short-term supply conditions is bearish.
  • The Pacific basin registered an uptick in supply of coal which is a price negative development. 
  • The spread in the supply chain capacity utilization between Atlantic and Pacific expanded which historically has been API2 price negative development.
  • We also picked up signs of an decrease in the inventory levels across key coal consuming regions. This is likely to cause some headwinds for coal prices as we enter the 2nd half of July.
  • Demand is  marginally bullish.
  • Import arbitrage into the Chinese market continues to be supportive for seaborne coal demand while the Indian arb is still negative which deters imports. The usual monsoon-related slowdown is also having an impact on the demand for coal into the region.
  • Our forecast for the Fossil fuel power generation capacity utilization during week #28-29 remains bearish as our climate model is anticipating an increase of the renewable power generation.
  • Macroeconomic conditions are overwhelmingly bearish.
  • Energy Intensity has weakened since the last update which is price negative. Manufacturing activity too continued to show weakness.
  • The currency impact index also indicates that further depreciation of the currencies of key coal exporting countries, would in theory incentivize more supply.
  • Our Money Markets liquidity index indicates credit tightening which is yet another price negative development.

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