January 26, 2015 Read More →

Goldman Sachs Sees Thermal Coal at ‘Retirement Age’

The Bellingham (Wash.) Herald is on the case this evening with an article on its Politics Blog that quotes analysts are Goldman Sachs getting attention from Reuters for a note saying thermal coal has reached “retirement age.”

The news is of special note in the Bellingham area because that’s where the U.S. coal industry has proposed a massive coal-export port expansion.

The Herald article, by Ralph Schwartz, notes that Goldman’s outlook supports a view expressed several weeks ago by IEEFA’s Tom Sanzillo.

Excerpts from Schwartz’s article:

  • “Analyzing international markets is complicated, but the argument seems to boil down to whether coal is in a permanent downward spiral or on the low end of a cycle, such that the price of coal will rise again.”
  • “The price of a metric ton of Australian thermal coal was $142 in January 2011. Since that peak, it has dropped below $67 a metric ton as of December 2014. That’s a five-year low.”
  • “‘Markets turn around, but we’re seeing a structural change, is what we’re thinking,’” said Tom Sanzillo of the Institute for Energy Economics and Financial Analysis in November.”

Full article.

The Reuters material that Schwartz cites is from Inside Dry Freight, which says Goldman published its views in a research note this past Friday.

Excerpts from the Reuters distillation:

  • “The use of coal for power generation is nearing its peak as the world turns to cleaner burning fuels and demand in top consumer China slows, analysts at Goldman Sachs said in a re- search note.”
  • “Coal prices have fallen over the last four years and 2015 may make it five, with many now asking whether the fuel is in a cyclical slump or permanent decline.”
  • “Goldman Sachs on Friday put itself firmly in the camp saying coal is in decline, citing sharply slowing demand from China as well as rising regulatory risks worldwide for new coal plants.”

Full newsletter.