Coal markets endure volatile patch
THERMAL coal markets have gone through a volatile patch, pulled up and down by global markets, as well as regional demand and supply swings, but the overall outlook is for coal to remain weak as high output clashes with falling consumption.
Coal and other commodities have been swept up in a broad sell-off across financial markets on concerns of sluggish global growth due to a sharp slowdown in China. While there was some respite after Beijing intervened to help prop up their markets, the relief was short-lived.
All physical coal markets have weakened this year, with Australian coal down 1.7 percent since January, South African cargoes 15.5 percent down and European coal down 16.5 percent.
“Manufacturing is on a slide across Asia… and in some places at a pretty rapid clip,” HSBC said yesterday.
A survey showed China’s manufacturing sector shrank at its fastest pace in at least three years last month.
Coal prices have also been moved by changes in regional supply and demand.
The relatively strong Australian coal market is largely a result of a price jump since late August, which traders put down to production cuts. ZAMBIA’S kwacha fell more than 5 percent to a record low against the dollar yesterday, dragged down by the sharp decline in the price of copper and worries about electricity supply. The kwacha plunged to 9.49 (R14.3129) per dollar, extending its losses against the greenback this year to 48 percent. The currency rallied to 9.415 per dollar, but was still down 4.73 percent, by 10.05am. “All this has built up from poor productivity arising from electricity supply problems and falling copper prices, but it has now reached a level of panic in the market,” analyst Maambo Hamaundu said referring to the currency. – Reuters