GB : Strategy - China needs more coal (again)

Prices of seaborne thermal coal’s flagship products have doubled since 3Q20 on the post-lockdown reactivation of industries worldwide – a reminder that a third of the world’s power generation capacity is still coal-fired. From here though, we see China as the primary support for the trade’s high prices. Its government is trying to suppress high/volatile domestic prices by boosting output from its vast local mining industry. But since its miners rarely respond to such directives + China’s summertime demand-kick occurs soon – imports must lift, in our view. Great news for coal-linked investors, even those busily reducing exposure to this ESG-risky commodity market.