Coal Prices, markets & analysis
Driven by the growth of the emerging markets of China and India, coal is set to surpass oil as the world’s top fuel source by 2017. As a result, access to independent and robust coal pricing information will be even more important for coal professionals over the coming years.
At ICIS, our global coal market reporters, editors and analysts closely examine this fast growing industry, giving them the ability to provide insightful, independent reports.
Our suite of reports and studies offers readers daily coal price assessments and indices, analysis on price drivers as well as in-depth analysis of one of the world’s biggest coal market, China.
Coal Overview Transcript
After a turbulent start to 2011 which saw China emerge as a major net importer of coal, global fuel markets rallied in response to the accident at the Japanese nuclear plant.
Ample supply and continuous worries over the global financial crisis now weigh heavily on major coal hubs. European recession fears are spilling in to China and other Asian countries.
This combination of ample supply and faltering economies mean that coal demand projections are well below anticipated levels. At the same time, the European market seems to have matured.
The traditional suppliers to Europe, such as Columbia, the US and Russia are now fixing their sights on Chinese and Indian markets as new sources of revenue.
Once again the focus of the coal market is shifting, the pace of change accelerating and the need for information increasing rapidly.
ICIS is well position to supply that information to help make important trading decisions.
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Coal: Market overview
Continuous uncertainty over the availability of Colombian coal in the first few months of 2014 has caused some supply tightness in the Atlantic basin at the start of year.
However, with no supply disruptions elsewhere in the world, the coal market remains fundamentally oversupplied, making it unlikely that the bullish sentiment would last much beyond Q1 2014.
Once again, the Chinese domestic coal market is bearish, and demand is likely to remain low – at least until the Lunar New Year holiday at the end of January.
Once Colombian supply issues are resolved, the South African and Australian high quality coal markets could fall in order to entice Asian buyers.
While production cuts may eventually provide a lift to coal prices, continuous global economic struggles are likely to keep them subdued for the foreseeable future.
In absence of production cuts the downside is limited, however, as current prices provide only the slimmest of profit margins for coal producers around the world.
The most significant trend in the thermal coal market during the fourth quarter of 2013 was a rise in prices, beginning from October. Prices rose by about Yuan (CNY) 120/tonne or 25% compared with late September’s levels.
Prices were given upward impetus through the yearly contract negotiations between mining producers and power plants. The state-owned mining giant Shenhua led the drive to push the market up together with other big mining producers, aiming to negotiate a high starting price by deliberately cutting supply, which created tightness in the market during November and December.
However, this situation reopened a window for importers, who had lost confidence during the first three quarters in 2013. They increased the volumes they were importing significantly in the fourth quarter, meaning that once producers had drawn up a pricing plan for the yearly contract in the end of December in 2013 the market fell quickly at the beginning of January 2014, dropping by CNY40-70/tonne in a couple of weeks.
Demand is expected to weaken in the first quarter of 2014 because of macroeconomic stability and the Spring Festival holiday, so prices may continue to move downward.
Updated to mid-Jan 2014
News & analysis
Coal news & analysis
ICIS price assessments are based on information gathered from a wide cross-section of the market, comprising consumers, producers, traders and distributors from more than 250 reporters world-wide. Confirmed deals, verified by both buyer and seller, provide the foundation of our price assessments.
Our in-depth market knowledge drives our specialist focus, as we recognise the importance of individual market dynamics and not a one-size-fits-all approach.
Over 25 years of reporting on key chemicals markets, including Coal, has brought global recognition of our methodology as being unbiased, authoritative and rigorous in preserving our editorial integrity. Our global network of reporters in Houston, London, Singapore, Shanghai, Guangzhou, Mumbai, Perth and Moscow ensures unrivalled coverage of established and emerging markets.
Coal Swaps Daily Methodology
Coal was generated in the Carboniferous Period starting around 360 million to 290 million years ago through the build up of silt and other sediments. Tectonic movements in the earth’s crust buried swamps and peat bogs to great depths, exposing the materials to a change in temperature and pressure.
Coal’s key characteristics are calorific value, its moister content, its ash content, its volatile content and its sulphur content although these can vary greatly, depending on the area where it is mined.
Coal is used primarily for electricity generation and steel manufacturing. The type of coal used for electricity generation is usually referred to as steam or thermal coal, while coal used for steel manufacturing is metallurgical coal or coking coal. The main difference between the two is in the calorific value, with typical calorific value of steam coal at 6,000kCal/kg.
Lignite or brown coal is also often used for electricity production but its calorific value is usually much lower than that of thermal coal. Lignite is usually produced and used domestically and any international trade is negligible.
Coal generates around 40% of global electricity production.