Some analysts see demand for metallurgical coal slackening off once China eases limits on production but those policies will still impact prices this year. Clarksons Platou Securities analyst Jeremy Sussman told Bloomberg this week metallurgical coal was still his pick of commodities.
“In July of 2016, we made metallurgical coal our favourite commodity overall, and prices were about US$90 per tonne and they rose to over $300/t,” he said.
“They’ve come back down to Earth a little bit, they’re around 220/t today, but the reality is we think met coal prices will remain strong in 2017 and beyond.”
While China did ease the limits on working days, pushing back the limit from 276 to 300 days for some miners, a broader programme to shut down ‘outdated’ operations will see supply pegged back by 2020.
Sussman said his bullishness came from supply concerns as China maintains “overcapacity curbs” through 2017 and worldwide production slows.
“There’s basically been no investment in coal, especially metallurgical coal, in the last three or four years as prices have lagged,” he said.(source: Miningjournal)