Thermal coal prices are projected to remain subdued for the rest of 2023 and throughout 2024, largely due to oversupply issues in the Chinese market resulting from heightened domestic production and increased imports. The World Bank Commodity Outlook outlined a decline in Australian coal prices, reflecting an 8% drop in the third quarter of 2023, following a substantial 31% decline in the previous half-year. Similar trends were observed in South African coal prices during this period. Despite a modest rise due to Middle East conflicts, coal prices seem to have stabilized after experiencing remarkable fluctuations.

According to forecasts, the Newcastle benchmark price (6,000 kcal) is anticipated to decrease from nearly US$180 a tonne in 2023. Presently, prices stand at $122 a tonne, significantly lower than the $380 observed at the year's commencement. The prediction maintains the Newcastle thermal coal price averages at $180/tonne for 2023 and $170 for 2024, citing weak global coal demand, surplus market supply, and the strength of the US dollar.

China's increased coal production, aimed at preventing power crises experienced in 2021, coupled with a substantial surge in coal imports, has aggravated the oversupply situation. Various factors, including fuel substitution due to declining natural gas prices and high EU Emissions Trading System (ETS) allowance prices, have contributed to the price slump, as highlighted in the World Bank Commodity Outlook. Additionally, increased supply from major producers and higher exports from Indonesia have further driven down market prices.

While prospects for price growth in the latter half of 2023 exist, as hinted by rising gas prices and the competitive edge of thermal coal in the Asian market, long-term forecasts anticipate a gradual decline in prices. The expectation is grounded in a global shift away from fossil fuel-derived energy and moderated consumption growth in key coal-consuming regions. However, potential upside risks due to geopolitical conflicts, weather-related disruptions, and increased power demand remain on the horizon, posing uncertainty to future price trends.