Muted coal recovery in 2021
Coal carriers can look forward to a 26 m-tone increase in movements of the black rock by sea this year. That increase springs off the lower baseline of pandemic-struck 2020. Statistics from global energy analyst IEA put 2020 trade volumes at a 10% retraction. It is equivalent to around 150 m tones with seaborne coal trade hardest hit. In that context, the additional 26 m tones for 2021 is worthy of little celebration.
"The Covid-19 crisis has completely reshaped global coal markets. Before the pandemic, we expected a small rebound in coal demand in 2020. But we have since witnessed the largest drop in coal consumption since the Second World War," said Keisuke Sadamori. We expect exports in 2021 to reach 1,323 m tones this year. "This means that export volumes will remain well below the pre-Covid volumes," said the IEA.
According to the IEA, there is little sign that global coal consumption will decline significantly in the coming years. If the world economy recovers, we expect the global coal demand to rise 2.6% in 2021. China, India and Southeast Asian economies account for most of the growth. But there could be surprise increases in coal consumption for the US and Europe.
“Renewables are on track to surpass coal as the largest source of electricity in the world by 2025. And natural gas will likely have taken over coal as the second largest source of primary energy after oil,” he said.
The IEA expects Asia determine the future of coal. China and India currently account for 65% of global coal demand. If it includes Japan, Korea, Taiwan and Southeast Asia, it will increase to 75%.
Changing trade patterns
In its 2020 Coal Report, IEA notes that patterns of global trade in thermal coal are changing. Traditionally, trade was defined by two geographical basins: the Pacific Basin and the Atlantic Basin. But it says this no longer reflects the pattern of global coal trade. Because the Atlas market is separated from the Asian market.
In addition, big US mining companies are increasingly moving away from thermal coal. They focus on metallurgical coal for iron and steel production. This changes the pattern of demand. Another factor driving 2021 uncertainty is lower imports of Australian coal by China. In mid-December, China appeared to formalise what had been an unofficial ban on Australian coal exports. The total coal export volumes also down to 0.4 m tones in November 2020. It down from a usual range of between 6 m and 10 m tones a month.
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