Commodities Comment:Even the slivers of hope for thermal coal start to disappear

The seaborne thermal coal market looks dire. One of the few bright spots thathas prevented prices falling further than they have YTD is strong Indiandemand growth, and general market expectations, including ours, are thatIndian import growth will continue. Port data shows that Indian thermal coalimports were up 34% YoY in 1H15.

    However, we caution that this import growth has masked a significant pickupin domestic coal production growth, which has in turn boosted domestic powerplant inventories to some of the highest recorded levels. If recent productiongrowth rates continue at anywhere near current levels, thermal coal importscould peak as early as this year. That would mean even more downside toprices than we are currently forecasting.