Uncertainties remain for coal despite price surge

SINGAPORE (July 26): Despite a surge in coal prices in recent weeks, long term coal prices are expected to fall as seaborne thermal coal demand declines structurally in the years to come, says Citi Research.

“However, seaborne thermal coal demand may stay more robust than expected in the next few years because of sharp production cuts and rather resilient consumption,” Citi’s analysts say in a Monday report.

Citi expects long term thermal coal (Newcastle 6000-kcal/kg) prices to fall to the mid-US$50/t ($68 per tonne) range, down from the low-US$60/t in recent trading and a cyclical peak of approximately US$140/t.

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