Coal news and updates

Coal prices are rising. World Bank data shows Australian coal prices have risen to $67.4 per tonne in August from $49.8 a tonne in January (See chart). A key reason for the support in coal prices is the supply side reforms in China. Production has dropped in China due to government regulation to cut the number of statutory working days for coal miners. Falling inventory and a wider gap between domestic coal and sea-borne cargo prices drove import volume up.

 

“This added only 8.16 million tonnes to China’s coal import volumes during 1H16 versus 1H15; but it had a big impact on Asia-Pacific seaborne prices indices, with the benchmark Newcastle 6,000 kcal free-on-board prices rising 31% from end-May to early September,” pointed out Fitch Ratings.

 

However, Fitch Ratings argues that since demand is still sluggish, the rise in coal prices is unlikely to be sustained.

SOurce:Livemint.com