(Montel) Chinese policies to support domestic coal prices while the country restructures its mining industry represented a long-term threat to Australia’s export volumes and prices, according to an Australian government report.
“Developments in China’s thermal coal market remain the key risk to the outlook for thermal coal prices,” said the report from the country’s Office of the Chief Economist.
This year’s customs delays for Australian coal shipments arriving in China appeared to be part of measures intended to stabilise domestic thermal coal prices within a desired range of CNY 500-570/t, the report said.
With the bulk of China’s domestic mining closures now completed, the report expected a large pipeline of safer, cleaner mines to ramp up production this year, reducing the need for imports.
“An estimated 200 million tonnes of capacity is ready to start production in 2019, more than offsetting an estimated 100 million tonnes of capacity closures.”
The latest Resources and Energy Quarterly forecast Australian benchmark thermal coal prices to fall USD 16 this year to USD 92/t – and to slide further to a trough of USD 76/t by 2021.
China was likely to see its imports fall at an average rate of around 5% annually from 216m tonnes last year to 157m tonnes by 2024, according to the report.
“Lower Chinese imports could potentially push prices even lower.”
