Projection of Coal Prices
We project ICE Newcastle coal (CV: 6,000 kcal/kg) for 2020F-2021F to fall short in the range of USD65-USD75/tonne or 3.8%-14.5% decreases from 2019’s average price of USD78/tonne. Not to mention that the global economy to lethargically grow leaves the 2020’s demand for coal slumping. That gloom projection likely to trim 2020’s estimated earnings hovering around 3.5%-7.8% YoY with lower ASP leaves a neutral rating for the coal industry in 2020: we pencil in.

Catalysts to Determine Coal Industry
Coal miners’ 2020 performance provides a benchmark for the coal industry as their performance is dependable on such catalysts as (1) China’s lower-than-prior-year demand concurrent with mandatory emission cut and coronavirus outbreak to deteriorate China’s economy; (2) nationwide coal production to surpass mandatory output; (3) surging operational costs stemming from production and sales costs amid struggling coal prices.


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