Coal news and updates

This year’s big story in the commodity markets has been coal. After years of falling prices, falling demand and rising supply, coal prices have leaped into action this year, and the gains have been nothing short of astounding. After a decision by Chinese regulators to control coal market supply, coal prices spiked during the first ten months of 2016.

 

Chinese coal production dropped 11% in the first 10 months of 2016, compared to the same period a year earlier as regulators imposed a 276-day production limit on mines around the country.

But now, it looks as if coal is falling back down to earth. Regulators have now increased the number of days China’s coal mines can operate, reversing earlier restrictions in a bid to control surging prices and boost production so that there is ample supply for heating during winter.

According to a note from Jefferies at the end of last week China’s coal import index, which has historically been highly correlated to domestic benchmarks, fell Rmb95/ton over 11 days, around 10% off the recent high of Rmb750/ton.

 

Glencore’s ‘spectacular failure’ coal trade blows out to $2b

This Clampdown Could Kill The Coal Rally In Just A Few Months

Analysts at the investment bank believe coal prices could fall further during the next few weeks as National regulators were “caught off guard by 1) the zeal of local regulators to restrict production, 2) unexpectedly high power demand and 3) hot money flooding commodity markets. This has resulted in nosebleed prices through a painful inventory restocking season.”

Source:Valuewalk