COALspot.com: A rally in thermal coal prices over the past few months, after years of decline, is still continuing and it is expected to rally at least until early next year.
The world’s coal industry has operated under stressful conditions since early 2012 until April 2016 due to a combination of oversupply and sinking demand. Supported by China’s new policy on its domestic coal miners, the international coal prices have started to rally with the speed which No one has forecasted. Today the coal is the top attractive and the hottest commodity in the world.
The current coal prices go vertical day by day, repeating the 2008 coal market situation, continuing its rally since April this year. The producers were kept revising their prices upwards on a regular basis for Q4’16 deliveries as well as Q1’17 supplies.
The end-users of coal might face tougher quarters, as prices continue to rise strongly in most of the coal producing counties. The coal buyers were almost panic to see the current price trends and now trying to secure the coal for Q4’16 as well as Q1’17 deliveries at the best level. The coal market was a buyer’s market for quite a long time and now it is slowly turning in to the seller’s market trend.
According to CS (i) coal Index, the average CS 5000 GAR coal index (Indonesian origin) rose 8.03% week over week. In the meantime, the CS 57 (5700 GAR coal) weekly index was increased 12.47 % percent week-over-week this past week.
The CS (i) Coal index is newly established an independent coal benchmark forecast for Indonesian particular coal types. The CS (i) Coal indices are generated through a Technology aided system, based on COALspot’s own proprietary algorithm requiring minimal human involvement. Therefore, these can be considered as a set of highly transparent & realistic indices for the Indonesian coals of 5700, 5000, 4200 and 3800 GAR grades.
Technology Aided CS (i) Coal indices are produced in accordance with the strict, pre-defined and fully transparent methodology and delivered via COALspot.com’s online platform through the inputs provided by panelists comprising consumers, producers and traders of Indonesian coal on a real-time basis during Indonesian office hours.
The coal market has been oversupplied for years which dragged prices down. However the recent move by the Chinese government, "for a reduction in the number of days domestic producers are allowed to operate (276 days annually), has indirectly contributed to greater imports which pushed the thermal coal prices upward since April this year. Many analysts expect thermal prices to keep gaining for the rest of this year and possibly into Q1 next year.
COALspot.com conducted survey to study the market opinion on the current price trend.
According to the COALspot’s weekly opinion poll, 48% of total participants (147) believe that, the price rally will not continue for a longer period or the price rally may end within 6 months. Out of 147 total participants, around 25 participants were representing End-Users, 34 from Coal producers and 60 from traders 56% of End-users were also believed the price rally may not last more than 6 months while 52% of traders were also in the same opinion.
However, 44% of coal producers who believed the price rally will continue at least 6 to 12 months. Around 15% of total participants were very optimistic on the current price trend and they believed the price rally continue more than 18 months.
The CS 42 (4200 GAR) Index increased by 5.11% week over week on 21 October 2016, while CS 38 Index which is representing 3800 GAR coal of Indonesian origin was rose 3.29% for the same period.
Year-On-Year (23 October 2015 – 21 October 2016)
CS 38 Coal Index up 25.76%
CS 42 Coal Index up 45.24%
CS 50 Coal Index up 44.29%
CS 57 Coal Index up 32.72%
Year-To-Date (8 Jan – 21 October 2016)
CS 38 Coal Index up 32.64%
CS 42 Coal Index up 46.95%
CS 50 Coal Index up 48.12%
CS 57 Coal Index up 36.65%
CS 38 - TM 40%, Ash 5% Max, Sulphur 0.4% Max and Calorific Value (GAR) 3,800 Kcal/kg
CS 42 - TM 35%, Ash 6% Max, Sulphur 0.8% Max and Calorific Value (GAR) 4,200Kcal/kg
CS 50 - TM 26%, Ash 7% Max, Sulphur 0.8% Max and Calorific Value (GAR) 5,000 Kcal/kg
CS 57 - TM 18%, Ash 12% Max, Sulphur 1.0% Max and Calorific Value (GAR) 5,700 Kcal/kg
(All parameters are in ARB basis)
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