Coal news and updates

Political risk dims outlook for coal

Pledges by the EU, the United States and China to commit to stricter emission reduction targets could have a dampening effect on future coal demand. However, the extent to which shale gas will replace coal in coal-consuming countries such as China remains to be seen.

China is the world’s largest consumer of coal, accounting for about 45% of global demand. However, S&P said coal demand in the country could flatten by 2020, as a result of lower GDP growth, renewables expansion and measures to curb CO2 emissions.

Meanwhile, analysts at ANZ bank have revised their forecast for thermal and coking coal prices down by around 10% over the next two-to-three years as a result of relatively weak demand combined with ample supply from China and Australia. The bank forecast average spot thermal coal prices of $82 per ton in 2016, which is $10 lower than its previous estimate.

"That said, we remain positive on the longer-term demand dynamics, with coal remaining a baseload power source in China and industrial and infrastructure activity in India gathering pace. Reduced capital expenditure on new mine capacity in Australia and Indonesia also plants the seeds for a tighter supply backdrop and price recovery in 2016 and 2017," ANZ said in a research note.

Source: interfaxenergy.com