After a turbulent start to 2011, which saw China emerge as a major net importer of coal, and global fuel markets rallied in response to the accident at the Japanese Fukushima nuclear plant, ample supply and continuous worries over the outcome of the global financial crisis weigh heavy on major coal hubs.
European recession fears are spilling into China and other Asian countries, with coal demand growth projections now far below levels anticipated in 2011. With few supply disruptions, the markets are awash in cheap cargoes looking for a home after a warm winter of 2011 suppressed demand in Europe and China.
Demand from Japan, where some of the major ports were damaged during the earthquake in March 2011, also remains below average, adding further downside pressure to the prices.
If supply remains healthy and global economies fail to rapidly recover from the ongoing economic crisis, coal prices are likely to remain subdued for the foreseeable future.