Our Coal Supply Curve Analysis report is now available! Feel free to request a copy at info@drybulkx.com.

Although coal prices have recently rebounded, several factors, including increased domestic mining output from China and India, stabilized gas prices, reduced demand, and weakened steel and industrial activity, have driven coal prices to levels much lower than those observed in Q4 2022. Thermal coal prices, in particular, have experienced significant declines: Australian Newcastle coal has plummeted from $440/t to $160/t, South African API4 coal from $260/t to $115/t, and Indonesian 4200 coal from $100/t to $50/t. Metallurgical coal prices have also seen substantial decreases, with Australian Hard Coking Coal prices falling from $480/t to $260/t.

Our analysis reveals that production costs have been rising at an annual rate of approximately 10% over the past 5 years. This increase can be attributed to five primary inflationary factors: royalties and taxes, deteriorating strip ratios, labor shortages, inland logistics (including barges, railways, and ports), and raw materials (such as fuel, explosives, and tires). The current environment has become particularly challenging for some miners in the 4th quartile, with current prices hovering near or even falling below their production costs.

The objectives of this report include listing the production costs of all coal mines that export, totaling approximately 1.5 billion metric tons per year. Additionally, we will analyze the potential reduction in the international market supply and investigate where the price floor might be for various coal price indices.

The thermal bituminous coal supply curve spans multiple countries, while the thermal sub-bituminous and metallurgical coal curves are primarily dominated by Indonesia and Australia, respectively. All three curves exhibit a small positive slope for the first three quartiles, followed by a significant increase in slope for the fourth quartile

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