[Ferro-Alloys.com] Although the seaborne thermal coal market had a slight price rebound during the third quarter, US exports are expected to remain low this year, forcing more production cuts and consolidation as the domestic market remain bearish as well, analysts said this week.
Despite the slight third-quarter price rebound in the CIF ARA market, "we estimate that most US exports are still not economical at current spot prices," B Riley FBR analysts Lucas Pipes, Matthew Key and Daniel Day wrote, noting dampened seaborne thermal coal demand due to a "sharp rise" in European carbon allowance prices and cheap natural gas and imported LNG.
"We also note that European natural gas-fired power generation is nearly at capacity, meaning any incremental power demand from a colder-than-expected winter would likely need to be met by increasing the utilization of coal-fired plants, a potential positive catalyst," they wrote.
However, according to Fitch Solutions, "we do not expect growing foreign demand for US coal to supplant weaker domestic demand or reverse the industry's decline." (S&P Global Platts)
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