Customized Research and Market Forecasts

Global coking coal price forecast (July 2014)


This year, Metal Expert Consulting continues to publish open quarterly reports to share its understanding of the coking coal market development in a medium- and long term and compare it with the consensus forecast of investment companies and analysts.

A price downfall in March was followed by a recovery of spot prices for Australian hard coking coal in Q2. The prices were stable within $110-115/t FOB (contract price for April-June was $120/t FOB Australia). Australian sellers and Japanese buyers have not signed contracts on deliveries of hard coking coal for Q3 yet.

Demand for coking coal from Chinese and Japanese consumers is rather weak, same as demand for other raw materials. In January-May, the growth rate of pig iron production in China and Japan was 0.3% y-o-y and -1% y-o-y, imports of coal going down.

Forecasts of investment companies prepared before June have been disregarded because of a sharp drop of global coal prices. We have considered only reports published in the past two months when preparing our consensus forecast.

Almost all the investment companies believe that current prices for coking coal are nearly bottom-low and they will start to recover next quarter.

Forecasts of global coking coal prices by industry and financial companies, $/t

Q1 14

Q2 14

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Q4 15

2014

2015

2016

Long-term

Consensus forecast

123

113

127

132

141

143

144

146

131

144

153

180

Maximum forecast

140

150

165

170

175

170

139

170

180

200

Minimum forecast

111

115

120

120

125

125

121

123

130

160

Note: To get the forecasts, all available prices have been adjusted to a common benchmark basis – the FOB Australia price for hard coking coal.

Comparison of actual coal prices in Q2 and Metal Expert Consulting’s forecast published in April shows that we have overestimated the probability of spot prices reaching the level of contract prices. Inaccuracy of our forecast was about 15%. Meanwhile, the investment companies’ forecast differs by $36/t or 32% from actual figures.

Comparison of coking coal price forecast accuracy of MEC and industry analysts over the past year

Q1 14

Q2 14

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Q4 15

Fact

123

113

-

-

-

-

-

-

Consensus forecast (investment banks) – July’13

175

175

179

181

-

-

-

-

Metal Expert Consulting – July’13 (basic scenario)

166

167

176

174

-

-

-

-

Metal Expert Consulting – July’13 (alternative scenario)

144

129

132

143

-

-

-

-

Consensus forecast (investments banks) – October’13

161

164

166

166

-

-

-

-

Metal Expert Consulting – October’13

155

139

150

159

-

-

-

-

Consensus forecast (investment banks) – January’14

154

157

160

160

-

-

-

-

Metal Expert Consulting – January’14

140

143

151

154

-

-

-

-

Consensus forecast (investment banks) – April’14

-

149

153

154

158

159

162

162

Metal Expert Consulting – April’14

-

130

141

133

120

143

126

128

Metal Expert Consulting’s methodology of forecasting global coking coal prices is based on mixed forecasting methods and includes models of non-linear dynamics, demand and supply balance in the global coal market, estimates of key suppliers’ costs. For more details on Metal Expert Consulting’s forecasting methods, see April’s report Global Iron Ore Price Forecast.

The graph below shows comparison of Metal Expert Consulting’s renewed export price forecast for Australian hard coking coal with the prices that investment and industry analysts expect (adjusted to the same basis).

Source: Metal Expert Consulting

© 2004-2017 Metal Expert LLC, all rights reserved Back to top