On the Blogs: The Coal Industry’s Fragile New Optimism

first_imgOn the Blogs: The Coal Industry’s Fragile New Optimism FacebookTwitterLinkedInEmailPrint分享Clyde Russell for Reuters:For the first time since 2012 there was a mood of optimism at the annual Coaltrans Asia meeting. What remains to be seen is whether this new-found view that the worst is past has any basis in reality, or whether it’s just a different type of delusion for the beleaguered coal industry.Much of the optimism is based on the fact that the benchmark Asian coal price, the Newcastle weekly index, has risen almost 3.9 percent so far this year, ending last week at $52.59 a tonne.If that sounds like a modest increase, it has to be seen in the context of a commodity that has fallen for the past five years, and is still 61 percent below its post-recession peak in January 2011 of $136.30 a tonne. Not to mention that it’s also worth little more than a quarter of its all-time high of $194.79 reached in the giddy boom prior to the 2008 global recession.The main reason for the collapse in prices was the switch from an under-supplied sea-borne market to one that was massively over-supplied as more production was brought on to meet what had been widely assumed to be China’s insatiable appetite for coal. While the supply-demand balance is (slowly) being restored, there is very little fundamental justification for prices to rise much further than current levels.Full item: Coal industry shouldn’t get carried away with new-found optimismlast_img read more