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Seaborne thermal coal trade to hit 1 bil mt in 2019 as new growth areas emerge

Thursday, November 7th, 2019

A tenuous supply and demand balance is expected in the global seaborne thermal coal market in 2020 as trade dynamics shift and new growth areas emerge, speakers at the CoalTrans Conference in Vietnam said Tuesday.

Seaborne trade for thermal coal, the most widely used fuel for generating electricity, is expected to hit the 1 billion mt mark in 2019 with supply and demand roughly balanced or slightly weaker, according to Rodrigo Echeverri, the head of research at Noble Resources International.

“The high calorific value (CV) coal is over supplied while the low CV is not,” said Echeverri at the event.

S&P Global Platts Analytics has forecast the seaborne trade for thermal coal for 2019 at 994 million mt and for 2020 at 1.015 billion mt.

Demand for thermal coal has dwindled from Far East consumers such as Japan, South Korea and Taiwan, dropping by about 12 million mt year on year, which is similar to the drop seen in Europe.

However, the Japanese demand in 2020 is expected to be slightly better due to the planned maintenance of several nuclear power plants.

“The seaborne thermal coal market is roughly a 1 billion mt market. For this year, we see the seaborne thermal coal market oversupplied by around 60 million mt,” said Matthew Boyle, lead analyst at S&P Global Platts.

“Seaborne thermal coal demand growth, as well as coal consumption, is slowing in China, the largest seaborne importer. The increase in Southeast Asian demand, particularly from Vietnam, as well as Indian demand is not enough to offset the decline in Chinese seaborne import volumes,” added Boyle.

Due to lower Chinese demand, Australian producers have started to concentrate on higher quality thermal coal production.

“Falling seaborne coal prices have seen US and Colombian coal exports decline in H2 2019,” said Boyle, who expects emerging demand markets such as Pakistan and Bangladesh to see growth in coal consumption.
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