Global Coal Benchmarks Below 2009 Levels

Thermal coal prices down 75 pct since 2008, 60 pct since 2011.

Three leading global thermal coal price benchmarks have fallen below levels last seen during the global financial crisis of 2008-2009, knocked by a sharp slowdown in demand, especially in Asia, and with mining output remaining stubbornly high.

Europe's Amsterdam-Rotterdam-Antwerp, Australia's Newcastle and South Africa's Richards Bay benchmarks have dropped to between $51 and $58 per tonne, or about 60 percent off their last peak in 2011 and 75 percent below all-time highs hit in 2008.

The unprecedented slump has been a contributing factor to miners such as BHP Billiton (BHPLF) and Rio Tinto (RTNTF) losing around half their share value since 2011.

The diversified firms are leading thermal, coking coal and iron ore producers and their shares have underperformed energy firms like oil-giant Exxon Mobil (XOM), whose stock has also been hit by tumbling crude prices.

Glencore (GLCNF), the world's largest exporter of thermal coal, has fared even worse with its stock down 75 percent since listing in 2011, as well as accumulating some $30 billion in debt at a time when the outlook for coal demand is weakening.

Morgan Stanley (MS) listed thermal coal and iron ore as two of the five weakest out of 24 measured commodities in its autumn outlook published this week.

Following the financial crisis of 2008/2009 many mining firms invested in new coal capacity, banking on a recovery in demand.

Just as output surged, however, demand started to slow. In North America, coal was undercut by the shale gas boom, resulting in U.S. miners seeking new buyers abroad, largely in Europe.

These American supplies hit a European market where coal demand was also falling along with a stagnant population, low economic growth and as renewables took more market share.

And Asia's demand - long the main pillar for coal growth - has also stalled.

"Manufacturing activity in key consumption regions slowed down which in turn suppressed the coal burn," commodity brokerage Marex Spectron said.

In China, the world's biggest coal importer, demand is also weakening as its economy grows at the slowest pace in decades. Beijing is also trying to fight choking pollution, to which coal contributes, as well as supporting local miners against imports.

As a result, January-August coal imports were down 31.3 percent over the same period last year, and there is even talk of China becoming a coal exporter.

In India, demand is also stalling despite healthy economic growth, thanks largely to improved output from state miner Coal India.
By Henning Gloystein