Moody's: Prices For Australian Coal Won't Recover Before The End Of 2016

Getty/Corey Davis

Slowing demand from China and a weak global economy have pushed the expected recovery in metallurgical coal prices into 2016, according to Moody’s Investors Service.

“Weak demand from China, which consumers close to 60% of the world’s coal, will push out the recovery,” says Moody’s Vice President and Senior Analyst, Anna Zubets-Anderson.

China also produces more than half of the world’s metallurgical coal.

“We are seeing slowing imports into China, and believe that the Chinese steelmakers rely more heavily on domestic met coal supplies and attempt to manage with lower inventory levels,” says Zubets-Anderson.

Continued growth in coal production in Australia, whose miners make up roughly half of the seaborne met-coal market, will also keep the prices low.

Newcastle Coal, the benchmark thermal coal price on the globe, has been in free-fall over the past 12 months, dropping from $85.20 a tonne last December to a low of $64.00.

“Recent move by China to impose import tariļ¬€s on coal in an apparent attempt to protect domestic miners presents further risks to the downside,” Moody’s says.

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