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Citi analysts see oversupplied seaborne thermal coal market for next four years

Seaborne thermal coal market would be well supplied for the next four years amid slowing demand in China and India, Citibank analysts said Wednesday.

“We expect the global thermal coal market to gradually shift from deficit to surplus in the next five years, due primarily to declining imports into Europe, China and India, as well as rising exports out of Indonesia and Australia,” the analysts said.
For 2018, while seaborne coal supply is seen at 956 million mt globally, demand is likely to touch 980 million mt, the analysts said.
“2018 is likely seeing maximum deficit of the thermal coal market for the past decade, and likely for the next five years as well,” the analysts said.

China and India are expected to see higher domestic coal supply and lower imports in the coming years, partly as both governments would likely to maintain certain levels of energy independence, the analysts noted.

“Thermal coal imports into China and India will therefore likely to be hurt, especially if coal demand starts to wobble in China.”
Citi forecast global seaborne supply of about 947 million mt for 2022, compared with import demand of 933 million mt.
The analysts expect China to import only 95.2 million mt of thermal coal in 2022 steadily decling from the expected 134.7 million mt level in 2018.

Meanwhile, Indian imports are being seen at 126.7 million mt in 2022, down from about 157.3 million forecast for 2018.
On the supply side, Indonesian thermal coal exports are expected to be at 326 million mt in 2022, down from about 347 million in 2018 and 353.7 million mt in 2020, the analysts said.

However, Australian exports are seen rising to 220.7 million mt in 2022, up from 200 million mt in 2017, the analysts added.
Source: Platts

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