Gradual thermal coal recovery

FITCH Ratings expects Newcastle-exported thermal coal prices to gradually increase as Indonesian mines struggle to remain profitable.
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Blair Price

Despite low wages, the coal industry of Indonesia – the world’s largest thermal coal exporting nation – is facing an uphill battle.

According to COALspot.com, Fitch’s recent analysis of an Indonesian coal miner included its view that a considerable amount of coal is effectively being exported at a loss at current prices.

“Fitch believes that most coal miners have been selectively mining in the more cost-effective areas of the mines, which generally is at the expense of long-term reserves and cannot be sustained,” the website reported.

“However, any improvement in prices will occur slowly because the market will remain over supplied, especially with weak demand from China, Fitch concluded.”

Spot Newcastle-exported thermal coal prices are trading at around $US70 a tonne this week – about 46% lower than three years ago.

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