Newcastle coal rally eases but supply could stay tight in 2019

Prices of a key Australian thermal coal grade went on a rollercoaster ride in 2018 following unexpected friction during yearly contract talks with a major export market, Japan. This hiccup in trade was shortlived and gave way to sustained high prices that could continue to shore up the sector. Following a period of cost-cutting and readjustment to new market realities over the last few years, the Australian coal sector now looks in better shape, while new coal-fired power plant builds across Asia should provide reliable demand for the fuel. Price-setting contracts delayed The persistent elevation in prices for the type of Australian thermal coal consumed by power plants in Japan was a key talking point in the Asia-Pacific thermal coal market during the year. Spot prices for Newcastle 6,000 kcal/kg NAR suddenly started to accelerate in April when talks to settle Japanese 2018-19 financial year term contract prices began to get bogged down, and failed to produce any settlement by the end-April deadline. The rally carried on through May and June, and went on to peak at $125/mt FOB Newcastle in mid-July. All the while the talks in Japan failed to produce any result in terms of a price benchmark… continue reading

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Source: CTRM Center

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