20 September 2019
- We remain bearish on short-term supply. We continue to pick up an increase in supply across both basins, with the Atlantic in particular seeing higher volumes after a brief period of gradual tightening in weeks 35-37. Global inventory levels continue to rise and with likely climb higher in week 39. This is a price negative development. Our Implied EU Days of Consumption (DoC) Index has finally tightened which should provide some much needed supported to prices.
- Although short-term demand conditions should improve, our overall view remains bearish. Lower renewable power generation is expected in the short-term (weeks 38-39) which should imply higher coal burn. However, we continue to see a further slowdown in overall Chinese coal demand, as well as in North-East Asia. Such developments would imply further pressure on NWC prices.
- Our short-term macroeconomic view remains bullish. Our proprietary currency model remains firmly supportive of prices although it has weakened since peaking in week 37. Short-term credit conditions finally improved and continue to show further upward momentum in the coming weeks. Energy intensity in the EU looks to slowdown which remains our only concern in the macro sector.