Global steam coal price forecast (April 2013)
Metal Expert Consulting continues to publish open quarterly reports to show its own understanding of the steam coal market development until 2015 and compare it with the consensus forecast of investment companies and analysts.
Steam coal prices in the global market fluctuated between $93/t and $96/t in February and March (Australian coal 6,600 kcal/kg, FOB Newcastle), $94/t being the Q1 average.
Metal Expert Consulting’s methodology of forecasting global steam coal prices is based on mixed forecasting methods and includes non-linear dynamics models, demand and supply balance of the global coal market, estimate of the key suppliers’ costs. For more details on Metal Expert Consulting forecasting methods, as well as on investment forecasts for raw materials, see January report Global iron ore price forecast.
Several forecasts of steam coal price change prepared after the beginning of 2013 are provided below.
Global steam coal forecasts by industry and financial companies, $/t
Many of analysts will update their forecasts only by late April, but when preparing the consensus forecast we considered January forecasts of the investment companies who saw actual Q1 prices correspond to the levels they expected (discrepancy of no more than 2%).
The use of our own forecasting methods showed results in Q1. The actual coal price was $96/t, which is only $2/t different from the level we suggested in the forecast published at the beginning of 2013 (investment companies’ forecast proved correct).
Comparison of steam coal price forecast accuracy of MEC and industry analysts
The discrepancy between the actual and forecast prices for coking coal in January-March has led to revision of Metal Expert Consulting forecast until the end of 2013, which is based on non-linear dynamics methods. According to the revised forecast, steam coal quotations will start going up as early as late April to stabilize at about $100/t in Q2-Q3, with a small drop likely only in at the end of 2013.
We have made no adjustments to the medium-term steam coal price forecast.
However, the model built following the non-linear dynamics methods suggests the probability a “negative" scenario will unfold in the markets for raw materials and steel products has been increasing over the recent months. Specifically, prices in the segment for steam coal are expected to fall by up to $90/t in the coming six months and then to grow to $93/t in Q4.
The diagram below presents comparison of Metal Expert Consulting forecast of export prices for Australian steam coal and price expectations of investment and industry analysts adjusted to this basis.
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