BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
COOKIE NOTICE

Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Coal

Bottom to coal cycle may continue to pushed forward: analyst

LNG | Natural Gas

New horizons: The forces shaping the future of the LNG market

Metals | Non-Ferrous | Steel

Market Data - Metales

Oil | Refined Products | Fuel Oil | Shipping | Dry Freight | Marine Fuels | Tankers

Mediterranean Bunker Fuel Conference, 8th Annual

Petrochemicals

Panorama del segundo semestre: El sector latinoamericano del PP busca su rumbo en los mercados asiático y estadounidense

Bottom to coal cycle may continue to pushed forward: analyst

Highlights

Daily pricing for tons and allowances for SO2 and NOx emissions

The exclusive Platts OTC Broker Index, a market assessment compiled from three of the largest and most respected coal brokers

What happened in yesterday's OTC markets, and why

An analysis of coal price trends in all major U.S. producing areas

Details of how major coal companies are trading in the financial markets

Coverage of mine openings, closings, production

Reports on who's in the market for coal

While Tudor Pickering Holt & Co is anxious to call the bottom of the coal-price cycle as being hit, a recovery may be pushed beyond 2017, with base case projections around $15/st for Powder River Basin coal, $175/mt for benchmark metallurgical coal, and $85/mt for Newcastle seaborne thermal coal, an analyst for the energy investment bank said Monday.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

"This continues to be our base case, but in each of the last 3 years, we've felt the need to roll this scenario forward a year and are not sure we won't have one more year to go," analyst Brandon Blossman said in a research note on Peabody Energy's share price.

Blossman detailed each of Peabody's major coal markets -- seaborne met, seaborne thermal, and PRB -- and the potential setbacks of a recovery.

BEARISH NATURAL GAS FORECAST WEIGHS ON PRB


"PRB can be (and arguably should be) a $15+/ton commodity in a $4/Mcf gas world. We'd be more enthusiastic about the leverage here if not for our decidedly bearish bent on 2015/16 natural gas prices," Blossman said.

By Blossman's estimates, the break-even point for PRB coal prices can drop sharply with natural gas prices.

For the marginal PRB consumer, which Blossman classifies as non-core PRB markets that are located at relatively longer distances from the mine, the theoretical break-even price for PRB coal drops sharply when natural gas prices fall from $4/Mcf to $3.50/Mcf.

"For the marginal PRB consumer, as gas moves from $4.00 down to $3.50/Mcf, break even PRB prices move from $17/ton to $11/ton. That's theoretical. We need to see producer discipline to sustainably push PRB prices above $13/ton, but it is possible," Blossman said.

"All that said, we'll be waiting to see if our fears of sub-$3/Mcf gas fade as we move past injection season before pushing a bullish PRB thesis," Blossman added.

In comparison to marginal PRB consumers, Blossman estimates that core PRB markets are in the money down to $2.75/Mcf or lower.

SEABORNE THERMAL COAL MAY LAG BOTH MET AND US THERMAL

"Seaborne thermal prices are ugly (both spot and forwards) and market feels stubbornly oversupplied with no obvious catalysts to force change on the near horizon," Blossman said.

Global seaborne production appears to be slowing, but the overall abundance of ongoing supply, coupled with additional new projects waiting to come online, it is no surprise that the current $70/mt Australian Newcastle export price is below the 2009 recessionary trough, Blossman said.

On the demand side, Blossman said that demand continues to grow but at a modest pace, with China seeing thermal power demand up just 2% year over year.

The third-quarter benchmark price for metallurgical coal was $120/mt FOB Australia, while Platts assessed the 90-day FOB Newcastle price (6,300 GAR) at $69.20/mt, and PRB 8,800-Btu/lb prompt quarter was assessed at $11.25/st on Friday.

--Charlie Noh, chang.noh@platts.com
--Edited by Derek Sands, derek.sands@platts.com