Fitch Rating: Asian thermal coal prices likely to remain firm

Fitch Ratings said in a recent report that Asian thermal coal prices for power generation are likely to remain firm as global supply pressures and Asian demand for solid fuels stabilizes
.

Fitch Rating: Asian thermal coal prices likely to remain firm

Fitch Ratings reported that the decline in investment partly reflects tighter environmental policies by banks and stable demand in Asia, with thermal coal prices expected to remain stable
.

Stable thermal coal prices are expected to ease margin pressures, accompanied by lower capital expenditures, which could support deleveraging
.
However, the ability to create new revenue streams is more constrained, and the risk of refinancing for small-scale miners may also increase
.

The current price of Newcastle coal, which has an energy content of 6,000 kcal, exceeds $100 per tonne, which is close to a five-year high
.
Fitch believes this is unsustainable because of increasing supplies from China and Indonesia
.

According to data compiled by Fitch Ratings, China's coal production rose 3% to 3.
4 billion tonnes
in 2017.
The Chinese government has issued guidance to increase production to 3.
7 billion tonnes in 2018 to support power producers
.
Indonesia's coal exports rose 13% year-on-year in the first quarter of this year, and Indonesian coal exports are likely to increase
further as producers cope with high gross margins.

Banks are increasingly reluctant to fund fossil fuel projects, which Fitch sees as a constraint on the recovery of coal investment
.
Many global and regional banks have steadfastened their stance on coal mine lending, reflecting concerns about climate change and, in some cases, under pressure
from environmental groups.

In particular, financing for low-grade new mines is becoming increasingly expensive and difficult to obtain, and it is difficult for small-scale, inefficient and environmentally noncompliant coal mining companies to obtain loans
.

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