The US will likely see more cuts to metallurgical coal mining capacity and Australia is also expected to make curtailments with over 25% of Queensland's coking coal industry estimated to be operating a loss, investment bank Cowen said Monday.
Concerns about oversupply and weak pricing in seaborne met coal markets were highlighted Friday at a coal industry event in New York, Cowen said. This led Cowen analyst Daniel Scott to remain more cautious on the sector in the near and intermediate term.
Cowen expects only a gradual price recovery in coking coal.
"Our gradual recovery thesis for met coal is still intact. The prevailing sentiment from presenters was an apparent pricing bottom, but with flowing seaborne volume there is little reason to expect a snap back recovery," Cowen said in a note.
Weakness in iron ore pricing -- with the Platts IODEX assessment for 62% Fe fines near a two-year low -- and a stronger Australian dollar are pressuring Australian miners, it said.
Cowen said there was now potential for renegotiation, with the railroads on previously signed take-or-pay arrangements.
"These contracts have been one of the primary reasons for the global excess and while the railroads maintain legal standing in existing contracts, an amendment to alleviate forced volumes may be in their best interest over the long term," it said.
- metaljunction »
- Metal News
Metal News & Events
Coal Insights (English) Monthly
Coal Insights is a ready reckoner for anyone associated with coal. This publication is aimed at tracking everything related to coal in India.
India Coal Market Watch(English) Monthly
ICMW is a one-stop source for all news, data and research pertaining to coal demand, consumption, stocks, spot- and long-term prices with respect to the Indian Market.
ISMW is a brand new high-end steel market report, covering all aspects of the steel industry in India.
Steel Insights(English) Monthly
Steel Insights delves into various facets of the domestic and global steel industry such as market fundamentals, raw material price trends, price forecasts etc.