14 February 2019
- Short-term supply conditions are marginally bearish. We picked up lower supply in both the Atlantic and Pacific basins which should help to alleviate some of the downward pressure from demand and macroeconomic conditions. However the de-stocking trend continues in Europe which will likely add pressure on the market. Overall, global inventory remains higher than average which is a price negative development.
- Overall demand conditions remain bearish. With the pickup in renewable power generation, we expect lower fossil fuel utilization which would imply weaker coal consumption in the short-term. We continue to expect lower Chinese coal demand in the short-term. This is expected to curb demand for seaborne material going forward. Weaker demand out of North Asia – JKT (Japan - South Korea - Taiwan) has also been picked up by our models.
- Macroeconomic conditions are marginally bearish. We picked up a marginal improvement in lending conditions which should go on to support short-medium demand. Overall currency conditions remain supportive despite some weakness in the purchasing power of key importers. The stronger appreciation of exporters’ currencies is also expected to add downward pressure on overall supply. Global manufacturing continues to drift lower as the broader economic slowdown is expected to curb coal consumption.