Taking Stock: Global Thermal Coal

2024's rangebound market has upside risks

I’m glad to be joining Matt Warder here to cover thermal coal. First off, some brief background for readers. I began working in coal markets in 2007 (17+ years ago!) on DTE Energy’s coal trading desk. I shifted to some natural gas work in 2010. But by 2012, I was back flying around to coal mines, working with the inimitable Mr. Warder and team at Wood Mackenzie. Once you get that coal dust on your face, it’s hard to wash it off…and so I’m back in the (figurative) coal fields again. I’ll be writing about thermal coal use, power markets, the tradable coal equities, etc.

I’ll start out with this first post by taking the temperature of the global thermal coal markets and looking out over the next year or so. This post will be lengthier than future ones as I lay out the building blocks of the global thermal coal picture.

After the big 2022 run-up in coal prices, I think where we’re at now is a fairly balanced market and that’s resulted in pretty rangebound pricing for most of 2024 (+/- $30/tonne at ARA over the year). The supply side of the thermal coal equation has been rationalized in recent years, and, as with met coal, costs (especially labor) have risen. That gives us strong downside resistance that should keep ARA thermal benchmark coal prices in the triple digits. In the very near term, we’re in the shoulder season for global demand, and China holds its national holidays this week (October 1-7). Prices could very well move sideways for the next several weeks, but I’d expect a modest rise over the next 12-24 months, with limited downside risks.

Like Matt, I’m mostly a fundamentals guy – I like to stack up supply and demand and see how s/d plays out in stockpiles, changes to which can trigger some pretty spectacular volatility in coal pricing. I walk through the broad, fundamental thermal coal themes below.