Thermal Coal

December 12, 2019

The Research Team reviews the Thermal Coal market

 

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12 December 2019 

  • We are bearish on overall short-term supply conditions. Short-term supply growth across the Atlantic basin finally looks to abate but the Pacific basin continues to see growth. Global inventory levels are expected to be on the ascendency. It is expected to reach one of the highest for the year. This would add further downward pressure on prices. Our Implied EU Days of Consumption (DoC) Index is the only positive driver within the section.
  • Our overall demand view remains bearish. We continue to expect lower than average fossil fuel power generation utilization rates in the short-term. China’s days of Consumption (DoC) continues to tighten as winter heating demand picks up. While north-east Asia (JKT) demand improved, they continue to trend lower than the peak we saw around weeks#45-46.
  • Our macro view improved since the last publication and as it stands we are marginally bullish. The continued weakness in the dollar helped to turn our currency impact index indicator bullish. The latest manufacturing data was encouraging and we turned positive in our global macro index. However, we continue to see weakness in energy intensity as well as overall short-term lending conditions which is likely to drag down overall coal demand.

 

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