Alert! Goldman slashes coal demand forcast! The earth smiles!:)
Coal’s biggest slump in four years is prompting banks from Goldman Sachs Group Inc. to Citigroup Inc. to cut price forecasts in Asia amid rising supply from Australia and Indonesia, the world’s largest exporters.
The power-station fuel at the Australian port of Newcastle may average $85 a metric ton this year, according to the median estimate of five banks in a Bloomberg survey. Coal has slipped as much as 19 percent in 2013 to trade at $76.25 last month, the lowest since November 2009, data from IHS McCloskey show. Prices have averaged $86.47 a ton during the year. They were at $76.70 Aug. 2. Goldman Sachs lowered its 2013 forecast by 7.6 percent last month, while Citigroup reduced its estimate 6.7 percent.
The slide in prices, coupled with rising production costs and slowing Chinese demand, is prompting miners from Glencore Xstrata Plc, the world’s biggest shipper, to Peabody Energy Corp. to cancel projects and fire workers. About 20 percent of Australian coal is extracted at a loss at $77 a ton, according to CIMB Group Holdings Bhd. Government officials, port operators and producers will meet next week at the Coaltrans conference in Australia to discuss the challenges facing the industry.
“Things in the Australian coal market are pretty bad,” Paolo Coghe, an analyst at Societe Generale SA in Paris, said in a telephone interview from Paris. “The market has perhaps been too optimistic when it comes to factoring in slowing Chinese demand.”