Asian coal prices set to rally
Steaming coal at Newcastle port, the Asian benchmark, averaged $US77.06 a tonne in the third quarter, the lowest since the same period in 2009, according to data from IHS McCloskey.
Morgan Stanley forecasts a fourth-quarter average of $US82 while CIMB Group Holdings predicts $US85.
Morgan Stanley says the coal glut will reach 14 million tonnes this year, or 1.6 per cent of global seaborne supply. A 25 per cent drop in supplies at Chinese power generators signals that demand for imports may increase.
‘‘There’s going to be a bit more buying activity from the Chinese,’’ said Mark Pervan, the head of commodity strategy at ANZ. ‘‘We’re starting to see a decline in Chinese stockpiles at both port and power plants. That’s a good sign for demand.’’
Supply cuts, stronger demand from China and restocking before the northern winter may lead to a ‘‘modestly increasing spot price’’, Peter Richardson and Joel Crane, at Morgan Stanley, said in a recent report. Thermal coal inventories at Chinese utilities are at the lowest level in two years.
Frequently Asked Questions about this Article…
Asian coal prices are expected to rally due to strengthening demand from China and production cuts by Australian miners. These factors are contributing to a potential increase in coal prices after a challenging quarter.
The average price of steaming coal at Newcastle port, which serves as the Asian benchmark, was $US77.06 per tonne in the third quarter, marking the lowest level since 2009.
Morgan Stanley forecasts a fourth-quarter average coal price of $US82 per tonne, while CIMB Group Holdings predicts a slightly higher average of $US85 per tonne.
The coal glut is expected to reach 14 million tonnes this year, accounting for 1.6% of global seaborne supply. This oversupply situation is impacting coal prices and market dynamics.
A 25% drop in supplies at Chinese power generators indicates a potential increase in demand for coal imports, as Chinese stockpiles at ports and power plants are declining.
Supply cuts, combined with stronger demand from China and restocking before the northern winter, may lead to a modest increase in spot coal prices, according to experts from Morgan Stanley.
Thermal coal inventories at Chinese utilities are currently at their lowest level in two years, which is a positive indicator for coal demand and potential price increases.
Insights on the expected coal price rally were provided by Mark Pervan, head of commodity strategy at ANZ, and experts Peter Richardson and Joel Crane from Morgan Stanley.
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