Coal prices set to fall further

Coal prices set to fall further
Published: 18 November 2015

Tagged Under: coal Prices China India 

Cement producers can expect to look forward to lower coal prices as world demand for the commodity is expected to fall and over-investment in mines is causing a production hike.

China’s slowing economic growth is forecast to see the country’s coal demand fall faster than its domestic supply, even after mine production cuts, thus affecting imports into the Asian nation. Chinese coal imports are contracting by a record 50Mt to 85Mt this year and further decreases are expected for 2016-17, according to Bank of America Merrill Lynch Global Research. While India continues to increase its coal imports, this growth is decelerating and is not expected to offset China’s import drop. India’s coal imports are forecast to peak at 175Mt in 2016 and remain more or less stable the following year.

In addition, coal prices are coming under pressure from cheap natural gas and government policies that favour renewable energy sources. This not only affects coal demand but also means pledges to reduce CO2 emissions by switching fuel and lessen the impact of climate change become less expensive, a fact not lost on market observers in the run-up to the UN Climate Change Conference COP21 in Paris at the end of November.