10 July 2019
- We pickup bullish developments with regards to short-term supply. We finally pickup moderation in overall supply conditions across both basins as the recent supply increases look to abate. This would be useful in providing a floor in prices going forward. Our implied Days of Consumption (EU) indicator continues to increase which are at one of the highest in recent years. Global inventory levels continue to trend lower which would continue to support the ongoing recovery in prices.
- We remained bearish in our short term assessment of overall demand conditions. We continue to expect fossil fuel utilization rates in the short-term to trend lower as short-term renewable generation pick up. Our implied DoC Indicator (China) Chinese coal demand strengthen in the short-term which is the only price positive indicator in our demand section. However, short-term demand from Japan-South Korea-Taiwan continue to weaken which completes an otherwise bearish demand picture.
- Short-term macroeconomic conditions are bullish. Expanding credit conditions along with positive tailwinds associated with the ongoing weakness in the dollar as indicated by our currency impact index are all price positive developments. Our energy intensity index indicator continues to strengthen which suggest some support to short-term coal consumption. However, the latest manufacturing data was disappointing and continue to suggest the broad slowdown in downstream activities remains prevalent.