Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.

  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list

Seaborne thermal coal trade to fall 30 mil mt in 2016, says analyst

Agriculture | Grains | Energy | Thermal Coal | LNG | Natural Gas | Oil | Crude Oil | LPG | Refined Products | Petrochemicals | Shipping | Tankers

Market Movers Asia, Jun 24-28: Trump, Xi to meet at G20 summit; US to announce additional sanctions on Iran


Platts Global Coal Alert

Commodities | Energy | Electric Power | Emissions | Renewables | Natural Gas | Natural Gas (North American)

Northeast Power and Gas Conference

Electricity | Coal

Enel intenta cerrar su planta de carbón de Chile seis meses antes de lo previsto

Seaborne thermal coal trade to fall 30 mil mt in 2016, says analyst

Singapore — Global seaborne thermal coal trade could fall 30 million mt this year, with much of the slump occurring in Europe, Mercuria Energy Trading's Director for Dry Bulk and Energy Fabio Gabrieli said at the Coaltrans Asia conference in Bali Monday.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

He estimated the global seaborne thermal coal market at 880 million mt for 2015 -- about 350 million mt of it out of Indonesia -- and forecast the 2016 total to shed 25 million mt in Europe and 10 million mt in India while gaining from marginal growth in emerging economies.

Given the slim cost difference between natural gas and coal, Europe is is more intent on reducing the use of coal in power production, Gabrieli said during his presentation.

India's thermal coal imports also look set to decline, Gabrieli said. He forecast India's imports from Indonesia to fall by up to 24 million mt year on year, partially offset by a 14 million mt increase in imports from South Africa, Colombia and elsewhere, around 10 million mt of it high cv coal.

Article Continues below...

He estimated India's total thermal coal imports in fiscal 2015-16 at 170 million mt.

Gabrieli attributed the growth in demand for high cv coal in India to the doubling of the country's clean environment tax in February to Rupees 400/mt ($5.94/mt).

"The clean environment cess [tax] is based on volume not the cv, so it works [in favor of] high cv coal," he said.

An end-user in India said he initially looked for low cv coal last year but shifted to mid-cv grades in the range of 4,600-5,300 kcal/kg GAR due to the tax increase.

"For example, I can burn 800 mt of higher cv coal each day instead of 1,000 mt of lower cv coal -- that will give a saving of 6,000 mt/month. Given that fixed costs are higher now than four or five years back on a per CV landed cost basis, it is lot more economic to import higher CV coal," he said.

During his presentation to the conference, Adani Enterprises CEO Vinay Prakash said: "Lower cv coal would have to discount even more than high cv coal to make economic sense for Indian importers."

Freight costs also played a key role in the influx of coal from more origins into India, conference presenters said.

Gabrieli said Colombia was able to price into the Indian market primarily because of lower freight rates.

Noble Resources International's Director, Energy Complex, Gerry Feerick, said: "Colombian coal is coming into the Pacific now due to the lower freight rates. How long this can continue is a whole different issue. The freight rates have improved significantly [on percentage terms] compared to start of the year, although the increase is from a very low base."


China's coal imports are forecast to fall by a further 4 million mt this year, Gabrieli said, but noted the decline was less steep than in the previous two years.

Many mines were not able to resume operations after the Chinese New Year holiday so there was less domestic available, which "has favored coal imports," he said.

China's coal imports from Australia, Russia and other markets was expected to fall by 8 million mt in 2016 and its intake of Indonesian coal to rise 4 million mt, he said.

China remains the big question mark in the market's recovery.

"If China's imports fall by 10 million-20 million then the market will not rebound, but if its imports stay flat or positive, then prices could be higher," he said.

The market has seen a rebound in prices as supply has shrunk in recent months.

According to Agung Pribadi, Director of Coal Management and Development at Indonesia's energy ministry, Indonesia's coal production is projected to fall by 42 million mt to 419 million mt between 2015 and 2016.

The volume allotted for export is set to contract by 58 million mt to 308 million mt, he added, as the government prioritizes domestic coal needs.

Domestic coal consumption is estimated to expand by about 29% this year to 111 million mt from 86 million mt in 2015, he said.

Meanwhile, Gabrieli said imports to Thailand, Malaysia, the Philippines, Vietnam, South Korea, Japan and Taiwan were set to increase by around 9 million mt year on year. "This is where the growth is," he said.

Around 50 GW of coal-fired capacity will be commissioned in these countries before the end of this decade, but they are not burning as much coal as expected as industrial demand has been slack, he said.

"People are bearish on demand in general, but are not factoring in supply cuts," he added.

Looking ahead, Feerick said: "Current coal prices will lead to an increasing shortage of coal supply in the next five years and potentially beyond."

--Mia Corazon Aureus,
--Shriram Sivaramakrishnan,
--Edited by Wendy Wells,

(Update: Corrects name of Mercuria Energy Trading's Director for Dry Bulk and Energy throughout in story published May 30)