Analysts revise up Q4 coal price forecasts by 8%

15-Oct-2018

Fourth-quarter Pacific basin thermal coal prices will likely average 8% more than forecast last month, due to the prospect of strong Chinese demand and limited Australian output, economic analysis firm FocusEconomics said.

It estimated Asia-Pacific benchmark Newcastle prices to average USD 105/t in October-December, up from a forecast of USD 97/t a month ago but still 6% lower than the latest Global Coal index price of USD 112.09/t.

“Thermal coal prices continue to be propped up by strong demand – particularly from China, where coal imports in August approached a multi-year high,” the firm said.

Chinese coal and lignite imports rose by 13.5% year on year to 28.7m tonnes in August, customs data showed.

“Moreover, the recent announcement that the Chinese government will loosen anti-pollution measures could boost demand for coal,” it said, adding, however, the effects of the policy change were still unclear.

“In addition, tight supply from Australia has also supported prices”.

The forecasts, which are an average of projections by 12 economic forecasters, saw 2019 prices averaging USD 94/t – up by 4.4% from the previous outlook.

2019 decline

But the year-ahead price average was still down significantly from an expected 2018 average of USD 103.10/t.

“Thermal coal prices are likely to dip on strong supply, thanks in part to higher production in Australia,” FocusEconomics said.

“In addition, although recent tweaks to environmental rules in China could boost demand in the short term, coal demand in many countries is likely to trend downwards as they transition towards cleaner fuels.”

Source: MONTEL