20 November 2019
- We remain outright bullish on short-term supply conditions. Abating supply growth across both Atlantic and Pacific basins continue to persist which should continue to provide further support to prices. Global inventory levels continue to tighten in the short-term based on our expectations expected to continue from week#47-48. Our Implied EU Days of Consumption (DoC) Index continues to strengthen with the combination of lower arrivals along with seasonal uptick in coal burn.
- Our overall demand view remains bearish. Based on our forecasts, we expect fossil fuel power generation utilization rates to trend lower in the short term. However, this slowdown is occurring from a high point from weeks#45-46. Tighter Chinese Days of Consumption (DoC) which comes on the back of marginally higher consumption while existing supply growth slows. JKT demand continues to improve which is at one of the strongest in the last 3 weeks.
- We continue to see weakening macroeconomic conditions which as it stands is outright bearish. Our FX model continues to weaken since peaking in week#45. Short-term credit conditions too continue to tighten. Energy intensity continues to weaken which suggest lower amount of energy required per economic output. Such a development would suggest lower fossil fuel demand which in turn suggests the same for coal as well. Manufacturing conditions continue to deteriorate which bucks the upward momentum we saw for the last 3 months.