Iron Ore & Coal_Coal_ Why are thermal & met coal prices soft_

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Basic Materials sector, specifically thermal coal and iron ore markets, with insights from UBS Evidence Lab [1][22]. Thermal Coal Market Insights - High CV thermal coal prices in Australia (gNEWC) have decreased from approximately $150/t in October to $130/t due to stable supply and softening demand, attributed to a warmer-than-expected winter start leading to elevated stock levels [1]. - Price expectations for 2025 are projected to remain range-bound between $120-140/t, with potential upside from colder weather patterns (La Nina) or supply disruptions, and downside risks from strong nuclear and gas output in Jakarta [1]. - API2 prices have only moderated by about $5/t since October, supported by gas-related concerns and lower ARA stocks [1]. - Intermediate and lower CV prices have remained stable at depressed levels, with recent declines in QHD prices from approximately RMB860/t in October to RMB808/t due to soft demand and high inventories in China [1]. Iron Ore Market Insights - The report indicates that iron ore shipments from Australia, Brazil, and South Africa are being monitored, with a focus on monthly shipment data [3][4][28]. - There is a noted seasonal softening in iron ore demand, with high inventories impacting market dynamics [25]. - The China pig iron production and steel trader inventories are also highlighted, indicating trends in domestic production and inventory levels [8][17][40]. Additional Insights - The report emphasizes the impact of weather on coal prices, particularly the risks associated with wet weather affecting supply and the potential for colder weather to drive demand [1][22]. - The OECD coal power generation is reported to be lower year-on-year, indicating a shift in energy production dynamics [54]. - The global coal shipments are tracked, showing trends in major exporting countries and their respective shipment volumes [48][49]. Conclusion - The thermal coal and iron ore markets are currently experiencing fluctuations due to a combination of supply stability, demand softness, and external factors such as weather conditions. The insights provided in the report are crucial for understanding the current landscape and potential future developments in these sectors [1][22][54].