Global steam coal price forecast (November 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.
Just like in the coking coal segment, over the recent months spot prices for steam coal have been moving down. In early November, the 6,000 kcal/kg material quotes dropped to $52/t FOB Newcastle.
With the actual price for steam coal being $58/t in Q3, the Metal Expert Consulting forecast issued in August turned out to be quite exact at $60/t, its inaccuracy being 3%. Meanwhile, forecasts of most investment banks differed from the actual price by $5/t or 9%.
Comparison of steam coal price forecast accuracy of Metal Expert Consulting and industry analysts over the recent year
The consensus forecast being the average of the forecasts of analysts from 12 companies says the steam coal price will stabilize at $60-60/t by the end of 2016. The most optimistic opinion is shared by Morgan Stanley and Citigroup Inc. (up to $64-68/t in the next couple of months). The analysts of Credit Suisse and Liberum Capital are the most pessimistic, expecting the steam coal price to decline further to $52-55/t and stabilize at low levels until 2020.
Global steam coal price forecasts by industry and financial companies, $/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 estimate of key suppliers’ costs. For more details on Metal Expert Consulting’s forecasting methods, see the November reports Global Iron Ore Price Forecast and Global Coking Coal Price Forecast.
According to Metal Expert Consulting’s estimates, in Q4 2015 – Q1 2016, the global steam coal price will drop to its lowest of $52/t. In 2017, the price is expected to increase to $62/t. In the long-term outlook, the steam coal price is likely to move up to $75-80/t.
The graph below shows comparison of Metal Expert Consulting’s most recent export price forecast for Australian steam coal with the prices that investment and industry analysts expect (adjusted to the same basis). In the short-term outlook, our forecast is similar to the minimum forecast of investment banks and industry experts, why our medium- and long-term forecasts are about the same as the consensus forecast.
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