This latest piece of research from Standard & Poors’ coal analysts in collaboration with CTI explores for the first time the implications of reduced demand for the debt ratings of the coal industry.

Key Findings

Recent announcements on carbon regulation in the U.S. and attempts to curb pollution in China are likely to slow the pace of coal demand. As governments globally seek to reduce their CO2 emissions, it looks increasingly likely that “King” coal will lose its crown.

In 2014, prices for seaborne thermal coal have dropped to $75 per ton from $80 per ton on average in 2013. S&P conclude that at the current price level, exports from the U.S. remain largely unprofitable.

The research indicates some companies and regions are better positioned for the energy transition than others and demonstrates the need for greater integration of demand risk in assessing the creditworthiness of the coal sector.