Bloomberg New Energy Finance has released an updated five-year outlook for the US power sector which indicates that the United States will resume the downward trajectory in coal consumption in 2015…they expect the US to shut down 23 gigawatts of coal power plant capacity this year, which is a staggering 7% of US total installed coal capacity.
Moving our gaze closer to home, Goldman Sachs analysts Christian Lelong and Amber Cai have looked at the puzzling phenomenon where coal mine production cutbacks in places like Australia focused on the Asian seaborne coal market have failed to generate a sustained rise in the thermal coal price…The Chinese domestic coal market is four times larger than the entire seaborne thermal coal market.
And hence is unable to influence price as the Chinese surplus builds. Thermal coal is trading at $54 today on its way to the $30s:
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
