Customized Research and Market Forecasts

Global steam coal price forecast (October 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.

Unlike the coking coal segment,where prices were stable in past months, global prices for steam coal kept decreasing in Q3. For instance, the price for Australian coal 6,600 kcal/kg dropped to $64/t FOB Newcastle in October from $73-74/t in April-June.

A lasting stagnation in the global market of steam coal makes it necessary to use only the latest forecasts of investment companies. We have considered only reports and data published in the past two months when preparing our consensus forecast.

Analysts have different opinions as to further price trends. Some investment banks expect further decline of global prices for steam coal (the minimum forecast is presented by Commonwealth Bank, Merill Lynch and UBS). Other analysts expect a price recovery during next few months (the most optimistic opinion corresponds to the maximum price forecast presented by Credit Suisse, Societe Generale and Investec).

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

Q1 14

Q2 14

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Q4 15

2014

2015

2016

2020

Consensus forecast

79

73

68

73

74

74

75

77

79

75

79

97

Maximum forecast

82

82

85

85

85

86

84

89

104

Minimum forecast

64

64

64

66

65

74

65

60

90

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 Q3 ($68/t) and the price we forecasted in July’s report ($78/t) shows that we have overestimated the market ability to accept the rise. Being in line with Metal Expert Consulting’s forecast, consensus forecast of investment companies shows the same inaccuracy.

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’s Global Iron Ore Price Forecast.

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

Q1 14

Q2 14

Q3 14

Q4 14

Q1 15

Q2 15

Q3 15

Q4 15

Fact

79

73

68

-

-

-

-

-

Consensus forecast (investment banks) – October 2013

90

90

90

92

-

-

-

-

Metal Expert Consulting - October 2013

84

80

83

85

-

-

-

-

Consensus forecast (investment banks) – January 2014

85

84

85

86

-

-

-

-

Metal Expert Consulting - January 2014

82

82

84

85

-

-

-

-

Consensus forecast (investment banks) – April 2014

-

83

84

85

87

88

89

89

Metal Expert Consulting - April 2014

-

81

78

78

75

82

78

78

Consensus forecast (investment banks) – July 2014

-

-

78

80

80

81

82

83

Metal Expert Consulting - July 2014

-

-

78

79

83

80

81

79

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).

According to Metal Expert Consulting’s estimates, price for steam coal is likely to be $70/t in the medium-term considered. The average price of $72/t registered in 2014-2015 is supposed to be bottom-low. In a long-term, it will increase to $86/t FOB Australia.

Source: Metal Expert Consulting

© 2004-2017 Metal Expert LLC, all rights reserved Back to top