Weekly Coal Index Report
After October’s stronger rollover, last week saw subdued pricing for Newcastle, as concerns over
prolonged import restrictions into China persisted. This saw RBCT prices fall too via the FOB spread.
Energy markets were generally stronger, with carbon prices abating somewhat since hitting recent
highs.
Capesize freight rates have continued to trend higher, keeping delivered coal prices into SE Asia robust, even as power demand wanes amidst weak Asian LNG prices. India’s Power Minister
has re-iterated that non-fossil fuel sources (nuclear, hydro and renewables) will account for 60% of
generation capacity by 2030, up from around 37% currently.
Meanwhile, Indian coal demand is expected to increase slightly going into 2021 as the economy recovers and overall power demand increases.
Chinese President Xi Jinping surprised the world by recently pledging China would aim for “carbon neutrality” by 2060, but Beijing remains concerned about energy security and economic growth, and continues to invest in new coal-fired generation, especially in more remote provinces.
During the JHB Mining Indaba, Sir Mick Davis said that, “Eskom can be relatively easily fixed in
three or so years, but it needs a cash injection from the state, the urgent reintroduction of skills, sensible coal contracts and to be free of political meddling”. Easier said than done!
Medium term trend (red signal line) is about to break into positive territory, signalling we should see some nice moves to the upside now. Certainly, if the coal price is to rally, around now would be the right time.
If price remains lacklustre at this point, we could see momentum start to top out, and then one would be tempted to start looking for the bears, and potential bullish capitalution.
For now however, the bulls are (only just) still in the driving seat.
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