Coal news and updates

Cooler temperatures in China have put a lid on thermal coal prices, but this setback shouldn’t last for long with the winter, peak-demand season just around the corner.

 

Thermal coal has experienced an aggressive rally this summer as supply disruptions and rising Chinese demand have boosted the commodity. Last week, prices hit a record high in China, of US$90.62 a ton, as concerns of increased safety checks following an accident at a mine in Shanxi would impact output.

This, of course, was just the latest catalyst for a rally that is being caused by increased demand and concerns of falling supply. Thermal coal has rallied 50% this year.

 

Imports of thermal coal into China have been higher than anticipated. Australian thermal coal shipments hit a 2017 high in July according to data from Thomson Reuters. Reports indicate that shipments fell earlier in August, but traders say orders for the rest of August and into September are high.

 

Thermal coal demand was also higher from China this summer due to the heat. Right now temperatures have cooled, and that has resulted in a lull in demand, for now. But, once winter hits in the Northern Hemisphere demand will see its peak and thermal coal could rally further.

 

Metallurgical coal has also been rallying from increased demand by the steel sector. Looking to the end of the year, thermal coal will likely outperform metallurgical coal as steel production will likely retreat come winter. At the same time, thermal coal demand should rally amid peak heating season in the Northern Hemisphere.

Source: economic calendar