Customized Research and Market Forecasts

Global steam coal price forecast (April 2015)


Metal Expert Consulting continues publishing 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.

Unlike the coking coal segment, global prices for steam coal have been increasing in recent months. For instance, the price for Australian coal 6,600 kcal/kg rose by $3/t to $67/t FOB Newcastle in Q1. However, in March-April the parity of coking and steam coal prices was restored.

Analysts and industry experts still have different opinions as to further price developments. As of the beginning of Q2, most investment banks expect global prices for steam coal to recover at a moderate pace in H2 as well as throughout 2016. The most optimistic opinion (corresponding to the maximum or about maximum price forecast) is shared by Commonwealth Bank, Merill Lynch and Euromonitor International. The minimum forecast is given by Credit Suisse, Deutsche Bank and Capital Economics. To prepare the consensus forecast, we have used the most recent forecasts of the investment banks.

Global steam coal price forecasts by industry and financial companies, $/t

Q2 15

Q3 15

Q4 15

Q1 16

Q2 16

Q3 16

Q4 16

2015

2016

2017

2023

Consensus forecast

60

60

61

62

63

64

65

62

63

69

84

Maximum forecast

67

70

73

75

77

79

81

69

78

85

96

Minimum forecast

53

53

54

52

52

52

52

57

52

55

60

Note: To get the forecasts, all available prices have been adjusted to a common benchmark basis – the FOB Australia price for 6,600 kcal/kg steam coal.

The comparison of actual price for steam coal in Q1 ($67/t) and the price we forecasted in January’s report ($63/t) shows the 6% inaccuracy. Meanwhile, the consensus forecast of investment companies was totally accurate.

Comparison of steam coal price forecast accuracy of Metal Expert Consulting and industry analysts over the recent year

Q1 15

Q2 15

Q3 15

Q4 15

Fact

67

-

-

-

Consensus forecast (investment banks) – July 14

80

81

82

83

Metal Expert Consulting – July 14

83

80

81

79

Consensus forecast (investment banks) – October 14

74

74

75

77

Metal Expert Consulting – October 14

69

71

73

73

Consensus forecast (investment banks) – January 15

67

68

68

70

Metal Expert Consulting – January 15

63

61

64

65

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 estimate of key suppliers’ costs. For more details on Metal Expert Consulting’s forecasting methods, see the January reports Global Iron Ore Price Forecast and Global Coking Coal Price Forecast.

According to Metal Expert Consulting’s estimates, price for steam coal is likely to touch bottom at $57/t by the end of Q2 to start recovering afterwards. In H2 2016 the coal price will increase to $70/t.

The graph below shows comparison of Metal Expert Consulting’s the most recent export price forecast for Australian steam 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