Thermal Coal OutlookThermal coal demand rose dramatically during 2007 and 2008, primarily due to the increasing demand for power generation in India & China.
Prices also hit historic highs in mid-2008 of around US$200 and have dropped to around the $80 level.
Even though the demand and price hikes were largely driven by Chinese demand, there was also a lot of sentiment distorting the true demand/supply picture for thermal coal.
The actual demand/supply balance of steam coal and power generation did not, and still does not experience such wild swings.
That is why the industry agrees that, even though the global financial crisis has had an impact on power generation forecasts, electricity production from coal is continuing at much the same pace as before and the current low $80s price levels are most likely to continue through to Q3 2009 after which they are forecast to pick up to S$90/$110.
These levels, the industry believes, realistically reflect the supply/demand picture. Energy experts believe that thermal coal prices are unlikely to fall below these levels in the longer-term.