Virtual Metal Group of UK said that thermal coal prices will continue to weaken in 2009 on lower demand and considers recent trends in coal sectors.
Virtual Metal in its Fortis Energy monthly report said that global coal prices continued tumbling during November 2008, reflecting the international downturn in demand and correcting the summer price surge that came on the back of rising demand and severe supply disruptions during the year. Spot prices at South Africa’s Richards Bay terminal, which exports thermal coal to Europe, fell by almost 50% from July 2008 record levels to under USD 92 tonne.
Excess stocks were in the past reduced through the export market, but coal prices on international markets have fallen even further than in China, giving exporters few opportunities to use remaining export quotas standing at 12 million tonnes in November 2008.
The VM Group said one buoyant market that remained for coal was India, which urgently needed to import an extra 15 million tonnes of thermal coal in the next few months. However, India was a price driven market and Chinese shipments remained more expensive on a delivered basis than shipments from Richards Bay.
The report noted that rising activity by Chinese exporters to sell into India could soon have an impact on Richards Bay coal prices. China halted exports to India in 2007 due to booming domestic demand.
It further said that “Given a 2009 outlook for still weaker demand in all markets, further squeezed by the recent collapse in oil and gas prices, prices will be dampened further next year.”
Source : Steelguru