Thermal coal prices have plummeted, averaging more recently about $50/t from South Africa and Australia.

Coal prices haven’t been this low since 2007 and commodity analysts are attributing this primarily to weaker demand from China. While prices are set to stabilize in 2016, the outlook for the thermal coal sector for the remainder of 2015 remains negative – ranging around than $60/t in 2016.

Fortunately, mines have been able to reduce the impact of pricing up to now, thanks to a reduction in oil prices and in South Africa the foreign exchange is helping. As a result, mines have in fact increased production where possible. However, no further benefits are likely to be realised moving forward and curtailments will and are already taking place – even from top producers such as Glencore.

According to Citi Bank, China's imports of thermal coal are estimated to be about 95.3 Mt in the 2016 year, down from 115 Mt forecast for this year. This is the result of quality restrictions and growing generation capacity from non-coal resources.

Coal is the main fuel for electricity in China, but power output is now growing at only 4% per year, far less than the 10% average some 15 years ago.

China's coal imports have collapsed some 30% since the start of this year alone, even as major producers China Shenhua Energy and China Coal Energy cut domestic output.

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