10 May 2019
- Short-term supply conditions are marginally bearish. We have picked up some tightness in both basins which is an important development in an otherwise weak supply section. However, net de-stocking efforts have re-emerged in Europe which should release additional supply into the market. We also expect global inventories to trend higher which is expected to put downward pressure on prices.
- We assess short-term demand conditions as marginally bullish. We forecast higher fossil fuel utilization which implies a higher coal burn. However, short-term demand conditions in China and North Asia (Japan-South Korea-Taiwan) remaining lacklustre.
- Macroeconomic conditions are bullish. We continue to pick up improved lending conditions and a higher energy intensity which are positive developments for short-medium term coal demand. This is further supported by rebounding manufacturing conditions. However, our key concern for macro is the strength of the dollar which is reflected in our Currency Impact Index. The index currently shows bearish conditions that that have continued to strengthen for the last 3 weeks.