Coal news and updates

Thermal coal producers' earnings are expected to improve in 2021 with domestic coal consumption forecast to increase 5%-10%, Moody's Investor Services said March 29.

 

While the expected improvement should aid producers in modest debt reduction, secular demand will persist over the next few years, "straining credit quality for thermal coal producers and intensifying ESG-related risks that diminish their access to capital," Moody's said.

Across all grades of coal, Moody's projects production will rebound to 550 million-575 million st in 2021, up from a previous forecast of 525 million-550 million st.

 

According to the report, Moody's forecasts are more conservative than the Energy Information Administration's, which expect annual output of approximately 581 million st. Additionally, Moody's expects less power generation demand than the EIA's forecast of 550 million st in 2021.

 

Both higher natural gas prices — with Henry Hub forecast averaging around $3/MMBtu throughout the year — along with production forecasts, are driving Moody's more conservative estimate.

 

"Given the expectation that production will increase only modestly, we expect some mines that were idled due to weak market conditions in 2020 will not restart production in the near term," the report said.

 

US thermal prices, too, are expected to remain subdued in 2021 as the Powder River Basin remains oversupplied. Although exports should rise on modestly stronger pricing.

 

Source : https://www.spglobal.com/platts/en/market-insights/latest-news/coal