Ongoing weak Chinese demand has seen coal prices fall to new lows, with expectations of continuing downwards movement.
Australian coal prices have now dropped to pre-GFC levels, as China pulls back on thermal and coking coal as its growth contracts, Reuters reports.
Newcastle terminal coal prices have now slumped to $56.60 per tonne, falling from a high of $80 per tonne in February.
ANZ Bank has dropped its forecast for Japanese contract prices from $75 per tonne to $70, while NAB has called $72.50, a significant drop from last year’s March price of $81.80 per tonne.
The fall comes as China announces plans to cut coal consumption in the country, with the National People’s Congress (NPC) outlining plans to reduce thermal coal consumption by 160 million tonnes over the next five years.
Only a week after this announcement China stated it will close the last of its mega coal fired power stations in Beijing.
However, there is one bright spot, with Newcastle terminal prices now cheaper than European prices, which sit just short of $61 per tonne, with the lower price combined with high quality making Australian coal potentially more attractive.
But with prices predicted to fall even further, the market ahead is gloomy for coal.