Natural gas prices have retreated over the last month as the high-demand winter season headed to a close. Milder weather forecasts for many areas of the United States signaled that
new injections would start exceeding inventory drawdowns in the coming weeks, keeping a lid on prices. On 13 April, the Henry Hub Natural Gas price was USD 2.74 per one million British thermal units ( MMBtu). The price was 1.8% lower than on the same day in the previous month and was down 7.4% on a year-to-date basis. In addition, the price was 15.2% lower than on the corresponding date in 2017. A record boom in natural gas production in the U.S., which the EIA projects will reach 81.1 billion cubic feet per day (Bcf/d) in 2018—up 7.5 Bcf/d from the 2017 level—provides strong
resistance to a signifi cant upswing in prices over the near-term, despite inventories at the end of March being at their lowest level since 2014. Weather forecasts for the spring furthermore
indicate higher-than-average temperatures across most of the continental United States. While this will likely boost natural gas consumption for power generation in the southern
and pacifi c regions, as demand for cooling increases, it could reduce demand in the north-east of the country and in the Midwest, where warm temperatures are milder and heating
demand habitually trumps cooling demand. Although record supply and warmer-than-normal weather in the U.S. should limit price increases in the coming quarter,
FocusEconomics panelists foresee higher prices by end- 2018, thanks in large part to robust demand in China, which aims to replace highly polluting coal with natural gas.
Panelists see the spot price averaging USD 3.03 per MMBtu in Q4 2018 and expect it to climb slightly, to USD 3.12 per MMBtu, in Q4 2019.
In light of recent developments, 8 panelists left their forecasts unchanged this month, while 8 revised down their projections. No panelists decided to upgrade price forecasts for the commodity.
The maximum price forecast for Q4 2018 is USD 3.81 per MMBtu, while the minimum forecast is USD 2.48 per MMBtu.
A seasonal moderation in coal demand, coupled with uncertainty surrounding Chinese imports and higher domestic production in China, saw thermal coal prices pulling back in recent weeks. On 13 April, the spot price for Australian
Thermal Coal was USD 93.4 per metric ton. The price was 4.7% lower than on the same day in March and was down 8.1% on a year-to-date basis. However, the price was 11.0%
higher than on the same day last year. Thermal coal prices have retreated since the Chinese
government moved to increase coal production at domestic mines and cap prices at the major coal port of Qinhuangdao in mid-February. In a similar vein, logistic hurdles that had
previously hampered coal deliveries to northern provinces have been recently cleared. As a result, coal-powered plants have increasingly opted to use domestic coal, causing imported inventories to mount rapidly at Chinese ports. Dwindling demand due to the warmer spring season has also
limited appetite for imported coal, pulling on global prices. In a bid to stabilize domestic coal prices, Chinese scrutiny of foreign thermal coal supplies has been further tightened in
recent days, with some ports temporarily turning down any coal shipments. Although this should boost domestic prices, it will weigh on seaborne coal prices.
In China, a string of import restrictions and rising domestic coal production despite cuts on outdated capacity should limit demand from the world’s largest thermal coal importer.
Likewise, rising coal production in India will likely put a lid on the country’s imports. Nonetheless, demand from ASEAN is expected to continue supporting prices as multiple large
coal-fi red power plants are commissioned this year and the next. Our panelists project that the price of thermal coal will average a more moderate USD 88.0 per metric ton in Q4
2018. In 2019, analysts see the price decreasing to USD 82.7 per metric ton in Q4 2018.
After taking recent events into account, 6 panelists maintained their projections this month and 4 raised their forecasts. Meanwhile, 1 panelist r evised his forecast down.
The minimum price forecast this month was USD 80.0 per metric ton in Q4 2018. On the fl ip side, the maximum price forecast was USD 97.5 per metric ton.
CARBÓN DE COQUE
Coking coal prices declined in recent weeks amid slowing steel demand in China and milder weather in Queensland. On 13 April, coking coal traded at USD 190.0 per metric ton, which was down 5.5% from the same day last month. The price was 1.6% lower on a year-to-date basis and was down
22.8% from the same day last year. Reduced demand from steel mills in China has led coal miners
to roll back prices. The Chinese government’s ongoing push to reduce carbon emissions was cited as a signifi cant driver behind lower demand, and the commodity is already trading
in an oversupplied market. In Queensland, following a bump in overseas prices amid the closing of ports due to Cyclone Iris, prices have fallen as ports resumed operations.
Although demand is expected to remain resilient going forward, business as usual in the major Australian coal port of Queensland and lower domestic prices in China should see
coking coal prices softening this year and next. Our panelists expect prices to average USD 169.1 per metric ton in Q4 2018 and USD 151.6 per metric ton in Q4 2019.
European low sulfur gasoil prices climbed in recent weeks on tighter conditions in continental markets, and on strides in the crude market as news broke of geopolitical dustups. On 13
April, gasoil traded at USD 632 per metric ton, which was up 13.2% from the same day last month and was 5.6% higher on a year-to-date basis. Moreover, the price was up 30.9% from
the same day last year. Demand for distillates has risen in recent weeks following
a typically slow winter, although supply has seen some constraints as low-season refi nery maintenance across continental Europe dragged into April. Moreover, import
volumes into Europe in April have been low due to planned work in the Middle East and a more favorable trading environment in Asia.
Sizeable refi ning margins for distillates should keep output and inventories elevated this year. A push for cleaner shipping fuels over the medium term is expected to support elevated prices. FocusEconomics panelists see prices averaging USD 605 per metric ton in Q4 2018 and USD 607 per metric ton in Q4 2019.
Uranium prices fell over the last month, continuing the largely downward trend seen in recent years. On 13 April, uranium traded at USD 21.0 per pound, which was 4.1% lower than
on the same day in March. The price was down 11.6% on a year-to-date basis and was 10.6% lower than on the same day in 2017.
The fall in uranium prices came amid declining prices of competing energy sources such as natural gas over the last month. In addition, the possibility of higher tariff s between the
U.S. and China likely dampened market sentiment. Limiting the price decrease, however, was the passing of the U.S. federal budget in late March, which will see the sale of surplus
uranium held by the U.S. Department of Energy halted over the coming months, reducing supply in the market. Upward pressure on prices is expected in the coming years due to increased demand from countries seeking to boost their nuclear-generating capacities, particularly China,
India and many in the Middle East. However, prices are still projected to remain far below the heights seen before the Fukushima nuclear plant disaster. FocusEconomics panelists
project that prices will average USD 25.6 per pound in Q4 2018 and USD 30.5 per pound in Q4 2019.
Reformulated blendstock for oxygenate blending (RBOB) gasoline prices rose in early April, driven by improving market fundamentals and strong gains in the crude market.
On 13 April, RBOB gasoline traded at USD 2.19 per gallon, which was 10.4% higher than on the same day last month. Moreover, the price was up 19.2% on a year-to-date basis
and was 18.2% higher than on the same day last year. Despite gasoline output reaching a fi ve-month high in late March as winter maintenance at U.S. refi neries wrapped
up, inventories fell continuously in the month on buoyant demand. Prices climbed higher in early April despite an uptick in stocks, which rose due to a surge in imports ahead of the annual switch by suppliers on 1 May to summer-grade fuel. Energy markets will continue rebalancing this year as OPEC- led output cuts run up against a booming global economy.
Over the medium term, however, near-record supply will be met with slower consumption growth. FocusEconomics panelists expect gasoline to trade at an average of USD 1.84
per gallon in Q4 2018 and at an average of USD 1.81 per gallon in Q4 2019.
FOCUS ECONOMICS - https://www.focus-economics.com/ - Desde Barcelona - España