Analysts question sustainability of thermal coal prices

Prices have been increasing since the earlier this year

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Questions remain regarding the sustainability of the current upturn in thermal coal prices, reports Indonesia Investment.

Thermal coal prices have come a long way since earlier 2016 lows, boosted by production cuts in leading producers. China is in the forefront of cuts, with coal production in the country expected to decline by 4.2 percent during the current year.

Prices are expected to continue rising, at least during the remaining of 2016. The winter season is approaching in the northern hemisphere, bringing with it a seasonal peak on demand.

There are, however, reasons to be cautious. As coal prices continue to increase, mining companies will be compelled to revise production cuts and bank on the higher prices. Moreover, coal demand may be skewed by the global effort to curb carbon emissions, with environmentally friendly energy sources gaining terrain in several markets.

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