IEA s Medium Term Coal Market Report 2016
Coal markets: recent developments Global coal demand declined in 2015 for the first time in this century Coal demand drop in China and US in 2015 was unprecedented China s coal demand declined in 2015 for the second year in a row Last time this happened was 1981. Economic restructuring and energy diversification underpinned such decline International coal trade shrank in 2015 for the first time in 20 years There is none to offset declines in Europe, India and especially China India, Australia and Russia increased production significantly in 2015 Despite low prices, cost reduction in Australia and Russia, and increasing demand in India were drivers for production ramp up Coal prices ramped up in 2016 to unexpected levels one year ago Chinese supply side policy changes was the main driver, exacerbated by disruption in Australia and other places
The shift of coal to Asia is accelerating 2000 22% 25% 46% 1% 4% 2% Coal consumption has decreased in North America and Europe while increasing strongly in Asia The coal world is becoming completely asymmetrical
The shift of coal to Asia is accelerating 2015 22% 12% 25% 10% 46% 73% 1% 4% 3% 1% 2% Coal consumption has decreased in North America and Europe while increasing strongly in Asia The coal world is becoming completely asymmetrical
USD/t Mt Coking coal prices: déjà vu? 350 Coking coal prices and monthly year-on-year change in BFI production 15 300 250 200 150 100 50 Jan 13 May 13 Sep 13 Jan 14 May 14 Sep 14 Jan 15 May 15 Sep 15 Jan 16 May 16 Sep 16 10 5 0-5 -10-15 ROW (right axis China (right axis Australian prime hard coking (FO The 2010 spike was caused by floods in Queensland The 2016 rally comes with policy changes in China, exacerbated by some disruptions
USD/t Prices increased for all types of coal 350 Prices of different types of coal 300 250 Australian prime ha coking (FOB) 200 150 100 50 Australian low-volat PCI (FOB) Newcastle steam (FOB) 0 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Thermal coal prices doubled mostly pushed by Chinese supply cut, but some disruptions also contributed
Does China set the global prices? Domestic coal from northern ports Net outbound Imports Net inbound Imports The large arbitrage in the southern import ports between domestic and imported coal is key to determines prices in China and elsewhere
Mtce Global coal demand: from growth to plateau 6000 Historical and forecast coal demand by region 5000 4000 3000 Rest of world European Union United States Southeast Asia India 2000 1000 0 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 China China European Southeast United India States Union Asia Largest growth will be in India and ASEAN region Largest decline will be in US and Europe Largest uncertainty is China
Mtce Coal consumption in China in the future: a flat trajectory Impact of diversification and economic rebalancing on Chinese coal demand 4 500 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 Demand without rebalancing Demand forecast 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Electricity Steel Cement Solar+Wind Hydro Nuclear Rebalancing of the economy and the increasing share of generation from hydro, nuclear and other renewables flatten the projection
TWh Who is hitting US coal? 0 2006 2015 change in power generation in the US - 100-200 - 300-400 - 500-600 - 700-800 Coal Demand Oil, Hydro, Nuclear Wind Solar Natural Gas Coal power generation has largely been replaced by gas generation But energy efficiency and wind were also significant
Mt A farewell to coal in Europe? Coal demand and share in power in the 10-largest consumers in the EU 300 270 240 210 180 150 120 90 60 30 0 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% *2015 Data Belgium was the last European country ending coal generation But for others, things are far more complex
China: giving access to electricity Countries where coal plants have been announced or built by Chinese companies After successful electrification at home, Chinese companies are building new coal-fired power plants in numerous countries.
Mt Coal trade forecast: all eyes on China and India 350 Coal imports to China, Japan and India 300 250 200 150 100 50 0 2010 2011 2012 2013 2014 2015 China Japan India Coal trade is forecast to recover by the end of the outlook period Imports to China and India will remain volatile and hard to predict
CCS: few steps, no strides. Large-scale coal-based CCUS projects in the world Boundary Dam 1 Mt CO 2 Great Plains Synfuel 3 Mt CO 2 Kemper County 3 Mt CO 2 Petra Nova 1.4 Mt CO 2 Coal related CO 2 emissions in 2015: 14 000 Mt Despite concrete progress on CCS, only 0.06% of coal-based CO2 emissions are captured Strong action from governments is urgently needed
Coal markets: the outlook Global demand growth to stall in the next coming years With decline in Europe and US almost offsetting increase in India and ASEAN region, China will determine the global trends In China, coal demand is in structural and slow decline driven by a new economic growth model and diversification from coal However, dependence on coal of China will remain and demand in 2021 is forecast higher than in 2015 Coal trade contracts, but recovers at the end of the outlook period Viet Nam, Malaysia, Pakistan, Philippines, Morocco, Turkey and other importers add up to increase coal trade Coal prices have strongly rebounded up in 2016. As a result, the coal industry has found some relief Looking ahead, low costs, slugging demand and structural oversupply in China do not support high prices Despite concrete progress, CCS development requires stronger support and commitment by governments Without CCS deployment, coal s future is seriously challenged, but also our climate targets
Medium Term Coal Market Report 2016