Thermal Coal Prices to Rise in Medium Term, Says Glencore Xstrata

Reuters reported that according to Glencore Xstrata plc (LSE:GLEN), thermal coal prices are likely to rise in the medium term, partially due to high electricity demand in Asia. The fact that the fuel is currently in oversupply due to “healthy exports from major producers” and “modest demand” will also contribute to a price rise.

As quoted in the market news:

Glencore Xstrata said that prices would have to rise as the oversupply forced many thermal coal exporters to sell at a loss.

‘Current price levels are unsustainable in the medium term with close to 30 percent of seaborne thermal production being cash cost negative,’ the company said in an analyst presentation with clients.

‘Exceptional coal cost competitiveness versus other fuel sources combined with continued strong demand from new generating capacity in Asia will drive higher prices in the medium term,’ it said, without giving a precise time frame.

Click here to read the full Reuters report.