Nearly all of the 47% growth in total world coal trade between 2008 and 2013 was driven by rising coal import demands by countries in Asia, specifically China and India… Not anymore.
This has been a particularly bad week for the global coal industry, already battling multi-year low prices for the commodity.
On Monday, the Institute for Energy Economics and Financial Analysis (IEEFA), set off fresh alarm bells by announcing that consumption of the fossil fuel was on track to drop an additional 2% to 4% before the end of the year. This as China, the top consumer, is stepping up efforts to battle against pollution, and global efforts to promote renewable energy are on the rise.
Now is the U.S. Energy Information Administration’s (EIA) turn, which said Friday it expected coal imports and exports to dramatically fall in 2015 for the second year straight.
The agency pointed the finger at China and India, which from 2008 to 2013 accounted for 98% of the increase in world coal trade. In the rest of the world, exports and imports of the commodity declined over the same period.
Preliminary data for 2014 and this year indicate a reversal of this trend, with declines in China’s coal imports currently on pace to more than offset slight increases in other countries in both years, said the EIA.
Coal imports by China, responsible for about half of global coal demand, has already fallen by 31% in the period between January and August this year. The EIA attributes this to rising output from domestic mines, improvements in coal transportation infrastructure, and slower growth in domestic demand of the fuel, which have resulted in lower domestic coal prices and reduced demand for coal imports.
In India, domestic coal production has been on the rise, but the EIA doesn’t think that trend will be sustained for long.
“Efforts are underway to substantially increase domestic coal production over the next few years and to complete three major rail transportation projects for facilitating increased shipments of coal from major producing regions in northeastern India to demand centers in other parts of the country,” it said.
Coal producers, however, have a two-year window, based on the report. While India’s coal miners increased domestic production last year and through the first few months of 2015, the first of three major coal railway projects, the Jharsuguda-Barpali railway link, won’t be completed until approximately 2017, it said.
2 Comments
EdBCN
If coal consumption is already dropping 2-4%, it’ll only be dropping faster in the coming years as the renewable energy push in China and India gather steam and solar and wind cost keep dropping by double digits, along with both countries determination to source more of their coal domestically. This industry is doomed. The recent OECD accord on financing coal projects is just one more nail in the coffin. It amazes me that they are even considering building two new coal terminals in Washington state.
Altaf
It may e because of down tend in all metals. As the prices of all metals are going down, the demand for metals go down and subsequently some mills will be closed. This reduces the demand for electricity and the first type of power plants that go out are coal fired. This may be the case of China. Now when reducing coal consumption, they reduce the coal from imported rather than local. This gives China an opportunity to increase the standards such as low sulfur, low ash content etc. This achieves both goals of reducing imports and pollution foot print.
Coming to India, the factors are different. Unlike China where govt can install power plants at an instance and shut them down in an instance, most of Indian power plants are private owned. They have to design plants with certain life span regardless of other issues. In the recent past lot of mines are closed in India dueto scandals. Power plants can not be shut due to unavailability of locally mined coal. Recently I read that last year India imported 200 mil. tons of coal which is many multiples of previous year. What I mean to say is what ever reduction that happens in Chinese imports will be made up by India. India may not match Chinese quantum but definitely will take advantage of the glut to what ever extent possible.