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Coal market will be worse: more supply, lower demand and prices

Author: WNP.PL (DC)

04-05-2016 6:51


Fig. PTWP (Gregory Giereszczak)

The situation on the domestic coal market in 2016 will be much worse than in 2015 - will be a large oversupply of coal, will decrease demand and therefore prices will fall dioxide - results from the analysis of Dom Maklerski PKO BP.

2016 promises to be very hard for the coal industry. Firstly, for the first time a few years to increase coal production (we estimate that more than 2 million tons). In 2015 production fell slightly (by 1 per cent.), and the demand was further strengthened by purchasing the Material Reserves Agency (ARM) and towarowaniem to energy companies and trading companies. Also strongly decreased imports (by 47 per cent.), the decline in exports by 18 percent. As a result, inventories at mines fell by nearly 3 million tons, is nearly 40 percent. This year, aggregate demand may be lower in the absence of the above mentioned factors supporting - analysts estimate Dom Maklerski PKO BP.

On the other hand, assume an increase in demand from power plants by approx. 1-2 percent. (in January and February growth reached 4 per cent. due to the renovation of the Bełchatów Power Plant) and a slight decline from the heat due to the warm winter. Total consumption should increase by about 1 percent. Analysts DM PKO BP estimate that the combination of production increases by 3 percent. with a decrease in aggregate demand (assuming no repeat business from ARM) by 1 percent will result in an increase in inventories and pressure on prices and on such a difficult market. - The first two months confirm these trends. Production increased by 11 per cent, or more than 1.2 million tons and sales by 13 per cent, or about 1.4 million tonnes (a year ago was a strike in JSW). Inventories rose by 0.3 million tons (in February 0.4 million tons). Meanwhile, prices have dropped by 13 percent for energy and 20 percent for heating and they are approx. 10 per cent below the average of 2015. Therefore, we assume the whole of 2016 lower prices by 8-10 percent of 8.8 to 9.0 zł per GJ - study's authors wrote. On the plus side, you can record the first several years of decline in unit cost of coal production in 2015 but it is mainly the effect of the transfer of a number of the worst mine to the Company Restructuring Mines (SRK ). - The industry was, however, a profound loss.

In 2016 will be even more difficult due to the sharp fall in prices - analysts conclude DM PKO BP. Support for domestic coal companies should not expect the global carbon market. ARA coal prices remain around $ 45 per tonne, a reflection of the hole amounted to less than 7 percent.


http://energetyka.wnp.pl/na-rynku-w...podaz-mniejszy-popyt-i-ceny,272764_1_0_0.html




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