Thermal coal was one of my big themes in 2013. And I believe 2014 will be the year when we see a significant break-out in this market.
Both for the commodity itself. And the companies that produce it.
As I’ve discussed, exploding thermal coal demand in India is the big driver for this story. With India’s imports turning in a record-setting year in 2013.
But it’s becoming clear there’s much more to this story.
A number of recent events show that coal demand is staying strong. In some surprising parts of the world.
These developments are very encouraging. Suggesting that the fundamentals in the thermal coal market are even better than I initially believed.
From price rises to production cuts, here are the “need to know” happenings in the space right now.
Japanese Buyers Pay Up For Supply
The biggest thing weighing down investor sentiment in the coal sector lately has been prices.
Since 2011, thermal coal prices in the Pacific sphere have fallen to as low as $75 per tonne, down from $140. And there was concern that oversupply could push rates even lower.
But those fears today look misplaced. Prices have stabilized in the range of $75 to $85 per tonne. Trading within this bracket for the last six months.
If investors needed confirmation that prices have bottomed, they got it last month from coal buyers in Japan.
Tokyo Electric Power Company (Tepco) has been meeting…