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Weekly Coal Index Report

 

 

January 11, 2021 - As the coal bulls remain firmly in charge, scientists have figured out how to turn low quality pulverized coal into polycrystalline nano-particles of graphite, opening up new uses for coal in applications from fire extinquishers to lithium-ion batteries.

Looking back over 2020, Vietnam is now SA’s 3rd top export market, after India and Pakistan, whilst shipments to mainland China are up 100% to around 3.7 Mmtpa.

Last year proved to be a year of two halves, with H1-20 enduring dismal export tonnages, followed by a big catch-up during H2-20. RBCT exported circa 63.6 Mmt in the first 11 months of 2020, putting it on track for around 70 Mmt for the full year. All things considered, that is not too bad an outcome during a global pandemic.

Chinese coal demand is meanwhile driving up Capesize rates in all basins, as both coal and iron ore traders replenish stocks ahead of the Lunar New year holiday. The IEA is expecting global coal demand to grow by around 2.6% from 2020 levels, with China, India and SE Asian economies accounting for most of the growth.

There could also be surprise increases in coal consumption for Europe if baseload supply needs to be stabilized. However, 2021 coal demand is still forecast to remain well below 2019 levels. The Rand has further weakened over the past week, helping SA exporters improve margins and driving up prices for lower grades of domestic coal. All around the world all eyes are on commodities now as the cheerleaders of global inflation.

As price hovers around the $90 level and momentum continues to subside, this helps improve the outlook for the bulls going forward. With MACD coming down to more reasonable levels, it’s quite possible that we could see some further upside, albeit unlikely to shoot the lights out.

The $90 level could prove to be a very comfortable hook around which price stabilises over the next couple of weeks.