Singapore — Global seaborne thermal coal supply is expected to fall short ofexpected demand in the second half of this year amid falling capitalexpenditures at key miners, Citi analysts said in a note Monday. Receive daily email alerts, subscriber notes & personalize your experience. Citi analysts expect global seaborne thermal coal supply to be 477million mt in H2 2018, about 31 million mt short of meeting global demand of508 million mt. "The supply side discipline by the miners has resulted in favorablesupply/demand balances and has kept coal prices higher for longer in ourview," the analysts said. "Thermal coal has rallied sharply since mid-April,and the prices remain elevated." The 7-45 day price of Newcastle 6,300 kcal/kg GAR has jumped 25% sinceApril to be assessed Friday at $116.70/mt FOB, S&P Global Platts data showed. On the supply side, steam coal production has not been meetingexpectations for the past few years in general, along with a decline incapital expenditures in the global coal industry, the analysts said. "Coal capex is down by about 80% from the peak of $10 billion in 2012 to$2.2 billion today for key global coal miners," they added. Citi expects Indonesian steam coal exports to reach 165.4 million mt inthe second half of the year, down from 168.7 million mt in the first half.India, Japan and China are expected to drive demand in the second half of theyear, the analysts said. India is expected to import 82.6 million mt in H2 2018, up from 60.9million mt in the first half, the analysts noted. Last week, the Indian government asked its utilities to start importingcoal amid shortage of domestic supply and rising demand for coal-firedelectricity. Meanwhile, China is expected to import 66.9 million mt of steam coal inthe second half of 2018, up 16.8 million mt from H1 2018. Japan's imports areforecast at 77.3 million mt in H2 2018, up 4.3 million mt from the first half. Overall, Citi expects global supply of 941 million mt to likely meet theannual demand this year but the Asian thermal coal market is expected toremain tight in the upcoming six months. --Yuchen Huo, huo.yuchen@spglobal.com --Edited by Irene Tang, irene.tang@spglobal.com
Global seaborne thermal coal supply is unlikely to meet demand in H2, according to Citi analysts. The 477 million tonnes forecast to be shipped is short of the 508 million tonnes required, it said. “Coal prices are likely to remain low for a long time and will not recover until after 2030,” said Citi’s chief investment officer Michael O’Rourke. Japan, India and China are driving demand, it said.