Global steam coal price forecast (April 2014)
In 2014, Metal Expert Consulting continues to publish open quarterly reports to share its understanding of the steam coal market development in a medium and long term and compare it with the consensus forecast of investment companies and analysts.
Just like in the coking coal segment, global prices for steam coal have been decreasing since early 2014. The price for Australian coal 6,600 kcal/kg dropped from $84/t in January to $76/t in March (FOB Newcastle).
Forecasts of investment companies prepared before February have been disregarded because of a sharp drop of global coal prices. We have considered only reports published in past two months when preparing our consensus forecast.
Most investment banks (Macquarie Bank, Credit Suisse, Morgan Stanley) expect a moderate recovery of global prices for steam coal till the end of 2014, their forecasts are similar (the difference is 5-10%). Econ Intelligence Unit and BREE publish the most optimistic forecasts (correspond to the maximum price forecast), while the most pessimistic ones are published by Capital Economics and Citigroup Inc (correspond to the minimum forecast).
About a third of the above companies provide no long-term forecasts for steam coal prices, therefore the consensus forecast, the maximum and minimum forecasts for the period have been based on 13 indicators. The minimum coal price forecast is offered by Numis and Citigroup Inc., the maximum one – by Morgan Stanley, Societe Generale, and CIMB Group.
Global steam coal price forecasts by industry and financial companies, $/t
The use of our own forecasting methods keeps showing good results. The forecast we published in late 2013 differs from actual price in Q1 by mere $2/t. Meanwhile, consensus forecast of investment companies has a greater inaccuracy of over 6% ($5/t).
Metal Expert Consulting’s methodology of forecasting global steam coal prices is based on mixed forecasting methods and includes models of non-linear dynamics, demand and supply balance in the global coal market, and estimation of key suppliers’ costs. For more details on Metal Expert Consulting’s forecasting methods, see April report Global Iron Ore Price Forecast.
Comparison of steam coal price forecast accuracy of MEC and industry analysts over the year
The graph below shows comparison of Metal Expert Consulting’s renewed export price forecast for Australian steam coal with the prices that investment and industry analysts expect (adjusted to the same basis).
Metal Expert Consulting estimates, prices for steam coal are likely to fall below $80/t in the medium term (to $75/t in Q4). Next year, prices will get bottom-low and in a long term they will go up to $84/t FOB Australia.
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