September 24, 2015 Read More →

Goldman Sachs: ‘Peak Coal’ Occurred in 2013

Dan Lowry for SNL:

Goldman Sachs Group Inc. is making a case for “peak coal” in a research note Sept. 22, offering that global thermal coal production and demand reached a high water mark in 2013 and will only decline in the future.

“Peak coal is coming sooner than expected,” Goldman said. “The industry does not require new investment given the ability of existing assets to satisfy flat demand, so prices will remain under pressure as the deflationary cycle continues.

“We also reset our long-term forecast to $50/[tonne], down 23% from $65/[tonne], to reflect what we see as the remote likelihood that the market will tighten ever again,” it said.

According to its latest model, Goldman predicts worldwide demand for thermal coal used in power production will decline from a high of 6.15 billion tonnes in 2013 to 5.98 billion tonnes at the end of its forecast range in 2019. Total global production is also expected to peak in 2013 at 6.20 billion tonnes and decline to 5.99 billion tonnes in 2019.

Goldman set its forecast for Australian thermal coal f.o.b. Newcastle at $54 per tonne for 2016, which marks a slight improvement from current spot pricing. But it expects a fall to $52 per tonne for 2017, and $51 per tonne for 2018.

Goldman makes case for ‘peak coal,’ expects pricing pressure and demand, output fall ($)

1 Comment on "Goldman Sachs: ‘Peak Coal’ Occurred in 2013"

Trackback | Comments RSS Feed