National Australia Bank has dropped its forecasts for thermal coal prices for the months ahead, citing the uncertainty around Chinese trade policy, it said Wednesday.
“Chinese thermal coal buyers are reportedly switching to other suppliers, with prolonged delays for clearing Australian coal through customs extending beyond the Dalian port group in recent weeks,” it said in its monthly Minerals and Energy Outlook.
For 2019, it has lowered the forecast for the Australian benchmark price by 7% to $88/mt FOB Newcastle. The bank dropped its forecast for April-June by 12% to $82/mt, July-September by 13% to $85/mt and October-December by 5% to $90/mt, it said.
It has left its forecasts for the four quarters of 2020 unchanged at $93/mt, $90/mt, $88/mt and $90/mt, respectively.
“While suppressing the Australian benchmark price in the near term, a resumption in normal trade could see the price rise again in coming months,” the bank said.
“A prolonged Chinese trade disruption provides downside risk to this forecast,” it added.
The delays for Australian coal to clear Chinese customs has been as long as three months, Commonwealth Bank of Australia analyst Vivek Dhar said in a research note on Friday. “Unsurprisingly, traders and importers are not interested in buying Australian coal.”