Fitch Ratings increased its thermal coal price forecasts because of constrained supply in China, where Australian coal is banned.Australian coal shipped from Newcastle was increased to $US115 a tonne from $US81 a tonne in 2021, $US87 a tonne from $US70 a tonne in 2022, and $US72 a tonne from $US68 a tonne in 2023. That applies to coal with an energy rating of 6000 kilocalories per kilo, free on board.Qinhuangdao coal, the Chinese benchmark, benefited from similar upgrades.“Chinese regulations further tightening the mine safety requirements implemented earlier this year have reduced thermal coal production in the country despite strong demand driven by the economic recovery,” the ratings agency said.China’s thermal power generation increased by 13.2 per cent year-on-year during the months of January to July. Coal inventories cannot keep up with imports.“The government has launched some mitigating actions, including reopening open-pit mines capable of producing 67 million tonnes of coal per year, approving new production capacities and requesting mines increase production volumes.”China is importing coal from Russia and Indonesia in greater volumes, and more Australian coal is going to India and Korea.
NHC Price at posting:
$2.27 Sentiment: Buy Disclosure: Held
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