Coal news and updates

Thermal coal is facing the twin global challenges of cyclically strong supply growth and a structural decline in demand growth, a note from Citi Research says.

 

There’s a sizable gap between international coal supply and demand in 2015, with supply substantially more than demand (see chart). For the current year, the gap is smaller. Moreover, there are news reports that China may consider a ban on low-quality coal. Any form of ban or import restriction in China is likely to have an adverse impact on prices because it is the world’s largest importer of coal. “Indonesian producers would be forced to turn to India, where buyers’ leverage would increase considerably. The results would likely be a fall in low grade coal prices, production curtailments in Indonesia, and increased Indian imports,” the Citi note said. Indonesia is the world’s largest coal exporter. Lower coal prices is good for India as it is one of the largest importers. The extent of increase in imports will depend on demand. India is estimated to have an import demand of 159.4 million tonnes in 2015, the Citi note says. Based on that assumption, every $1 per tonne decline in prices should lead to savings of $159.4 million.

 

 

Source: http://www.livemint.com/