The seaborne metallurgical coal market will remain in oversupply to 2018, according to EY’s Global Steel 2014 report, with the surplus expected to peak at 7% in 2017 before bouncing back 4% in 2018. However, prices are expected to rise over than period after the recent period of steep decline, hitting US$ 200/t in 2015 before settling back to US$180/t in 2018 – although there is inherent uncertainty in pricing forecasts due to the nature of metallurgical coal supply and demand.
“It is worth nothing that the iron ore and coking coal markets are highly concentrated and their global trade is dominated by a few major players that can swiftly reduce production to alter market balance and affect prices,” wrote Pierre Mangers, executive director of EY Luxembourg in the report. “Prices will also be affected by steel market demand, which is driven by the uncertain global economic environment.”
On the supply side, supply growth will be driven by large-scale expansion in Australia, including Anglo Americans 5 million tpa Grosvener mine and the Jellinbah’s 4 million tpa Lake Vermont expansion. Supply from Mozambique and Mongolia is also expected to ramp up – but the timing of such expansion is variable. EY also expects the US to continue its status as a swing supplier, affecting the market in the medium term.
Demand will be driven by China, the largest importer of coal. The Middle Kingdom will account for 25% of metallurgical coal imports in 2018.
Edited from various sources by Jonathan Rowland
Read the article online at: https://www.worldcoal.com/coal/09052014/ey_forecasts_metallurgical_coal_surplus_to_2018_coal821/