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Newcastle thermal coal stretches recovery as China outlook improves

Coal News - Published on Mon, 22 Apr 2019

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Montel reported that the Pacific basin’s benchmark thermal coal price has continued to recover from some of its lowest levels since the summer of 2017 amid more optimistic views of the health of China’s economy. Global Coal’s Newcastle index climbed 5% for a second week to reach USD 89.58 per tonne. The Pacific basin’s benchmark for high grade (6,000 kcal/kg) Australian coal deliveries to Asia remains 11% below where it began the year. However, it has pulled away from April’s dip below USD 80/t, its lowest level in over two years.

Coal prices on China’s Zhengzhou exchange pushed out their highest levels in five months. They last settled at CNY 622.40 per tonne, up marginally on last Wednesday’s settlement.

Japan, Australia’s top customer for high calorific coal, also saw imports rise over the first three months of the year.

Q1 imports climbed almost 1% YoY to 29.5 million tonnes, finance ministry data showed this week. However, this was mostly off the back of a strong January, with volumes for March down 3% at 9.6m tonnes.

Commonwealth Bank commodities analyst Vivek Dhar highlighted the release of Chinese economic data that surpassed market expectations last week. Industrial production growth rose from an expansion of around 5.3% in January and February to 8.5% in March – well above forecasts of 5.9% growth. Mr Dhar said that “That is really your driver of upstream demand. China’s commodity demand may have already bottomed. One coal trader suggested the Pacific basin’s market looked stable, especially at the high calorific end of the spectrum. Newcastle prices overshot their recent falls and the recovery was just correction.”

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Posted By : Rabi Wangkhem on Mon, 22 Apr 2019
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