FX.co ★ Coal Rebounds from 3-Month Low

Newcastle coal futures have experienced a resurgence, climbing to $103 per tonne from a three-month low of $100 observed on September 11th. This rebound is largely attributed to a temporary increase in Chinese demand, which has momentarily overshadowed concerns about an oversupplied market. As the world's largest coal consumer, China is on track to import 27.4 million tons of seaborne thermal coal in September, marking the highest level of the year. This development challenges the prevailing expectation that central government-led capacity reductions would dampen power consumption. These signals have countered the impact of plentiful supply on prices, which have resulted in coal futures declining by nearly 20% year-to-date. Current estimates indicate that Chinese miners are developing 1.28 billion tonnes of coal mine capacity. Despite a 3% annual decrease in output during August, due to efforts to reduce redundancy and a temporary slowdown aimed at ensuring cleaner air for Beijing's military parade, coal output for the year remains 3% higher over the first eight months.