Coal-supplier ‘bloodshed’ seen as small miners exposed: IHS
06 Feb 2015
The price of coal, which has declined more than 50 percent since 2011, may fall further this year, which will hurt smaller producers of the fuel, IHS Inc. said.
“This is a supply-driven recession,” David Price, senior director of coal at the Englewood, Colorado-based consultancy, said at a Cape Town conference Thursday. “We’re going to see some bloodshed on the supply side this year. We’re going to see some very significant production cuts” among smaller producers, he said.
Miners from Colombia to Australia maintained output as prices fell for a fourth year in 2014 amid a global glut of seaborne coal that Deutsche Bank AG says is poised to triple this year. The fuel at Australia’s Newcastle port, an Asian benchmark price, has dropped 26 percent since the start of 2014 to $63.55 a metric ton on Feb. 4 on the ICE Futures Exchange.
Coal prices are likely to drop further, Price said. “I think we are going to see some surprisingly low prices this year,” he said. “I don’t think we’ll ever see a sustainable price above $100 again.”
Source: Bloomberg