Supply remains tight in the Asia Pacific region with Australian prices playing catch-up to a firm Richards Bay Coal Terminal market.

Chinese domestic coal prices remain volatile with a confused supply picture sans Australian coal. The rest of the energy complex is also relatively strong with crude, carbon and European Union power prices enjoying gains on the week, giving some strength to delivered ARA coal markets.

As Glencore confirmed the retirement of Ivan Glasenberg, with Gary Nagle stepping into the CEO role, it also announced the closure of several of its Australian coal mines nearing their end of life by 2023.

However, the supply cut of some 13-million tonnes a year will be partially offset by some of Glencore’s newer Australian operations coming online next year.

Meanwhile, US coal exports have suffered around a 30% reduction this year, with almost only Japan remaining as a loyal thermal customer.

GLENCORE 
We wish Glasenberg well in the next chapter of his endeavours, for we are sure there will be one. As the quintessential trader, Ivan has timed his retirement spectacularly well, leaving as coal prices rally to the highs of last year. It was announced in October 2018 that he would leave in three to five years' time.

That now appears to have been brought forward. Perhaps he has seen the writing on coal’s wall?

Or perhaps he will take Glencore’s coal assets private, together with Tor Peterson, leaving Gary Nagle with a clean, investable Glencore? Whatever Ivan does, it is sure to signal the trend for coal’s future.

The running of the bulls continues apace. However, price is lower than last year and yet momentum is far more overbought.

This is not generally a good sign. Although there is theoretically more room to run to the upside, on the basis that “continuation is always more likely than change”, we would now start hazarding a guess that prices are topping out.

We also expect the forward curve, currently slightly backwardated, to start rolling positions towards the back end.

Thus, as spot prices prices subside, the curve should steepen. Of course, this is just our prediction, and miners should also remember that the forward curve hardly ever predicts future prices very well.

However, miners should be using the forward curve to their advantage, and opportunities to start locking in forward prices should become more readily available.