Customized Research and Market Forecasts

Global steam coal price forecast (February 2013)


Prices for steam coal in the global market demonstrate positive dynamics in January-February 2013. In particular, prices for Australian material (6,600 ccal/kg) hiked from $90/t to $97/t FOB Newcastle; Japanese consumers pay $107/t CFR East Coast.

At the moment, market researchers have different opinions on further development of the coal market (as well as raw material and steel product markets in general). Metal Expert Consulting offers its own vision of steam coal market until 2015, comparing it with consensus forecast of investment companies and analiticians.

Metal Expert Consulting applies a steam coal price forecast methodology based on mixed forecasting methods, including non-linear dynamics, global coal demand/supply models, assessment of costs of key suppliers. 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 price forecasts by industrial and financial analiticians, $/t

Source

Forecast basis

Date of update

2012

Q1

Q2

Q3

Q4

2013

2014

2015

Long-term

2013

Goldman Sachs

Thermal coal - Australia

Jan ‘13

95

n/a

n/a

n/a

n/a

99

100

100

100

Deutsche Bank

Newcastle FOB - Thermal

Jan ‘13

97

n/a

n/a

n/a

n/a

95

102

100

95

World Bank

Coal (Australian), thermal, FOB Newcastle/Port Kembla

Jan ‘13

96

n/a

n/a

n/a

n/a

93

91

90

100

Citigroup Inc.

Thermal Coal Asia (NEWC)

Feb ‘13

94

95

95

100

105

99

111

115

105

Macquarie Bank

Thermal coal - Australian Spot

Jan ‘13

97

92

90

90

88

90

94

90

85

Credit Suisse

Newcastle FOB

Jan ‘13

95

95

95

100

100

98

108

118

110

Merill Lynch

Thermal Coal, FOB Australia

Jan ‘13

96

95

90

96

99

95

100

100

103

ANZ

Newc Thermal Coal (Spot)

Jan ‘13

98

93

99

103

105

100

109

113

n/a

Consensus forecast

Steam coal (FOB Australia)

96

94

94

98

99

96

102

103

100

Forecast, max

Steam coal (FOB Australia)

96

95

99

103

105

100

111

118

110

Forecast, min

Steam coal (FOB Australia)

96

92

90

90

88

90

91

90

85

The diagram below presents a comparison of Metal Expert Consulting forecast of export prices for Australian steam coal and price expectations of investment and industry analyticians adjusted to this basis.

Metal Expert Consulting’s quarterly forecast for 2013 is based on our know-how methodologies and non-linear dynamics methods. We expect that coking coal prices will hit this year’s ceiling in Q2, reflecting the consumer demand. In the future, the market will drift towards balance and prices will stabilize at around $100/t.

Metal Expert Consulting’s medium-term price forecast for steam coal differs considerably from consensus forecast of investment companies. We think the global market will move towards surplus in that period, because planned commissionings of coal mining projects will be ahead of the growth of consumers’ demand. Nevertheless, coal prices will be supported by high prices for hydrocarbons.

New suppliers with lower production costs (against average market level) and tougher competition in the global market for steam coal will push down profitability of leading suppliers and ensure yearly prices decrease to $85/t in long-term perspective.

Source: Metal Expert Consulting

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