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
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
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.
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