Experts predict that they predict that the price of coal in 2024 in a negative scenario may fall to USD 100. per tonand futures contracts currently oscillate around USD 160/t.
China has dominated the global thermal coal market. Goldman Sachs estimates that the Chinese market accounts for 57% of the total. total world production, 53 percent consumption and 25 percent. total imports.
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Record high coal stocks
According to analysts, the 2021 crisis was a warning to China about the importance of energy security and energy self-sufficiencyespecially in the area of coal mining and adequate stocks to ensure stable supplies to power plants.
As a result, the Chinese authorities resigned from plans to limit coal mining introduced in 2015 and significantly raised production targets. Combined with increase in imports this led to an oversupply of the raw material.
Going forward, we expect China’s coal production growth to continue to be offset by strong growth in coal consumption, making high coal imports no longer necessary to rebalance the domestic market.
Analysts add that an increase in production could potentially lead to shifts in China’s coal import policy (such as canceling zero coal tariffs) and market incentives (reversing the price differential between imported and domestic coal). This, in turn, may lead to a decrease in imports and, as a result, to a significant risk for the global market.
Our current forecast of $129 per tonne of Newcastle coal for 2024 already assumes a reduction in imports of raw material to China in 2024 by about 65 million tons per year to 245 million tons, which should be enough to maintain record high coal stocks in China anyway. Sax.
In addition, experts estimate that the scenario in which imports to China fall by 100 million tons compared to our assumptions, it would mean a risk of falling prices Newcastle coal by about $30/tonne, or $100/tonne. This would be well below current futures levels of around $160/tonne.
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2023-08-19 06:38:56
#Oversupply #coal #China #Experts #warn
