Newcastle coal price to decline 30% by 2020 – Ministry

07-January-2019

Asia-Pacific benchmark Newcastle coal prices could decline by around 30% by 2020, from 2018 average levels, as Chinese import demand cools, an Australian government report said.

The Newcastle spot price is predicted to decline from an estimated average of USD 105/t last year to USD 86/t in 2019 and to USD 74/t in 2020, according to the report, published by the department of industry, innovation and science.

“The forecast decline in prices is driven primarily by an expected slowdown in import demand from China over the next two years,” it said, citing policy changes to curb emissions and dependency on coal in China as well as in other major economies.

“Nevertheless, a lack of substantial investment in new thermal coal [production] capacity is expected to put a floor under prices, which are forecast to remain well above the lows of 2015 and 2016,” it added.

The report noted that despite the recent strength in prices, a range of factors had contributed to a slowdown in investment in Australia and the rest of the world.

These included difficulties in attracting finance and uncertainty regarding future policy developments around the world.

The Global Coal Newcastle index was assessed last at USD 100.76/t, down from July’s multi-year high of USD 122.89/t.

It fell below USD 50/t in early 2016.

World trade outlook

Meanwhile, world trade in thermal coal is forecast to decline by 1.5% in 2019 to 1.08bn tonnes and by 1.8% in 2020 to 1.06bn tonnes, the report said.

This follows an estimated 1% increase last year to 1.1bn tones.

“Underpinning the decline in world trade is a decline in thermal coal imports from China and advanced economies, which is offsetting growth from emerging economies in Asia,” it said.

Source: MONTEL