Thermal coal prices will remain at relatively high levels
over the long term despite aggressive mine expansions to meet the growth in
Asian demand, particularly from China and India, said coal analyst Prakash
Sharma.
Sharma told that seaborne thermal coal demand will “grow
exponentially” from now until 2030 mainly because of the increase in
demand from China and India.
He said that although there will be “aggressive” thermal coal supply
expansions, steam coal prices in the long term will defy expectations of a drop
and will instead remain at high levels.
Sharma said there may be short-term seasonal fluctuations such as the drop in
prices in the current quarter, but the Newcastle reference coal price for
Australian coal will increase progressively.
India's seaborne steam coal demand by 2030 is expected to be
400 million mt/year from 80 million mt in 2011, overtaking Japan.
Cost pressures from changing fiscal regimes such as the
carbon tax in Australia and the minimum export price regulations in Indonesia
will also support high thermal coal prices.
However, improved demand may also lead to a decline in quality thermal coal
export as large volumes of low rank coals from Indonesia may enter the seaborne
market.
Source: Platts
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