From Joe Aldina below -- a balanced analysis -- in contrast to...

From Joe Aldina below -- a balanced analysis -- in contrast to some of the hyper-bulls here.



Joe AldinaHello coal traders! It's time for a thermal coal update as prices are moving modestly higher. Both physical and futures prices for NEWC high-cv thermal coal prices are up to nearly US$107/mt. API2 physical prices are being marked by Argus at levels just shy of NEWC prices, while the June 2025 futures contract is being marked at just under US$104/mt. However you slice it, prices have picked up several dollars over the last week due mainly to rising prices for the energy complex. TTF prices are approaching EUR40/MWh again (~US$13.50/MMBtu) and Henry Hub is close to US$4/MMBtu, which will see coal demand in the midwest, TX and the southeast tick higher. I'm hopeful that this positive price action continues and I do think we've reached a bottom for thermal coal. We're now heading into the summer cooling season in the Northern Hemisphere and it's warm in the US and Europe, with temperatures in Europe expected to move higher as the country is under a "heat dome" this June. There's still the potential for summer heat in China too. And power and coal demand in Spain is expected to surge with peak system demand hitting 31 GW in the next couple weeks, up from normal levels of 26 GW. High hydropower will add a couple GW of supply, but closing the supply-demand gap and ensuring no load shedding will be difficult and require gas and coal. Even nuclear plants struggle with cooling reactor cores when temps are over 40 degrees C, which is expected. There are signs of life for Asian thermal coal too, with ship tracking data from Kpler showing that Indian and Chinese imports are ticking up from subdued levels seen in Q1 of this year. China imported ~6.4 million mt in May and 7 million in April, up from 4.2 million in March and 3.6 million in February. India also imported nearly 18 million mt of thermal coal in May, it's strongest month of imports since October 2023. So I'm cautiously optimistic for thermal coal prices. Chinese coal stockpiles are still elevated and Chinese production has been doing fairly well, so I'm not calling for a big increase in seaborne thermal coal marker prices, but I do think the recent lows are behind us. For those of you with access, the Financial Times put out a decent read today on "Why the world cannot quit coal." For those of you who don't have access, the summary is that coal demand may never peak (or at least not for the next 5-10 years) as the world historically just consumes more of every form of energy! If you're a subscriber to thecoaltrader, you're already well aware of that! If you're not, we're running a special now so you can get our content at a discount! https://www.ft.com/content/f6cc8bbc-9e45-4062-b216-37875b75d3cc Happy trading! -JA