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Steam building up in thermal coal market

Steel News - Published on Mon, 23 Jul 2012

Global thermal coal market seems at the cross road of riddance from curse the 2012. With the occidental economies dictating price undulations in hitherto sacred coal industry much H1 has defiled the demand from BRICS countries as well.

Being at the vanguard of uncanny economic growth and BRIC power houses China and India have been lacerating after mauling over the past 1 year due to recalcitrant recession in USA and Europe. Moreover a sudden penchant for shale gas as replacement for thermal coal in USA has altered the dynamics in an already beleaguered market.

Surplus availability of thermal coal and sagging demand in China owing to abysmal economic activity has prompted Chinese buyers to postpone rather than perish. Sitting over an epitomic 18 million tonne inventory and cheaper material available aplenty from USA thereby was barely any reason for them to be indulgent.

On hindsight the Indian buyers started being fussy with plummeting levels and appreciating INR.

Week 29 witnessed first signs of turnaround with insinuations of interest evinced by Chinese and Indian buyers. Setting the foundation the European power houses have already demonstrated interest in thermal coal over gas for generation due to better economies in situation where every penny counts.

Stifling developments with Force Majeure in Glencore’s Columbian mines and the resolution of strikes in BHP-Mitsubishi Alliance in Bowen Basin still hazy has propped the sentiments. Moreover it is learn that most of US miners are mulling curtailing production rather than selling at cost when the Australians are still able to manage better deals.

Indian power major NTPC is foraying in the market to source 16 million tonnes this year has certainly given traction to the market.

Thermal coal prices have been trying to stabilize around USD 90 per tonne DES ARA for a fortnight .It is reported that physical prompt coal prices rose slightly on Friday in thin trade on steady demand from Asia and China\'s return to the spot market.

An October DES ARA cargo traded at USD 91.00, up 85 cents

With the global economy still in turbulence and Chinese domestic market in disarray, sustainability is questionable. A lot will depend on USD strength and its impact on the oil prices.

Source - Strategic Research institute


Posted By : admin on Mon, 23 Jul 2012
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