Changing nature of seaborne thermal coal markets

Trade patterns in the coal market

Eoghan Cunningham, CEO - globalCOAL

Copyright © by globalCOAL 2001 - 2014

For today’s discussion…

• Changing trade flows

• Changes in the derivatives market

• Changing nature of market participants

• Conclusions

Changes in trade flows


Areas experiencing change

EuropeDemand Stalling?

AustraliaNew

destinations

IndonesiaFrom zero to hero

South AfricaLooking to

export Eastwards

ColombiaEurope’s supplier

USALooking to

export to theFar East


Europe stalls…

0

200

400

600

800

1,000

1,200

1,400

1,600

2005 2010 2015 2020 2025 2030 2035 2040

Mil

lio

n t

on

ne

s

Pacific

Atlantic

Sources: globalCOAL, Euracoal, IHS McCloskey

Atlantic vs Pacific Steam Coal Imports, 2005-2040


South Africa turns to the East

Sources: globalCOAL, IHS McCloskey

0

10

20

30

40

50

60

70

80

90

100

2005 2010 2015 2020 2030 2040

Mil

lio

n t

on

ne

s

Atlantic

Pacific

Richards Bay Coal Terminal Thermal Coal Exports by Destination, 2005-2040


South Africa turns to the East

0

5

10

15

20

25

30

35

40

45

2006 2007 2008 2009 2010 2011 2012 2013 2014*

Mil

lio

n t

on

ne

s

Taiwan

China

India


Richards Bay Coal Terminal Thermal Coal Exports to Key Asian Destinations, 2006-2014

*2014 annualised from Aug’14


Australia diversifies

0

20

40

60

80

100

120

140

160

180

200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

Mil

lio

n t

on

ne

s

China

Taiwan

South Korea

Japan


Australian Thermal Coal Exports by Major Asian Destination, 2000-2014



Where to for Indonesia?

0

100

200

300

400

500

600

700

2000 2005 2010 2015 2020 2025 2030 2035 2040

Mil

lio

n t

on

ne

s


Growth of Total Indonesian Coal Exports, 2000-2040




Indonesian Coal Exports by Product, 2000-2014

Lignite

Sub-bit & other

Bituminous

*2014 annualised from Jun’14

0

50

100

150

200

250

300

350

400

450

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

Mil

lio

n t

on

ne

s

Sub-bituminous, Lignite & Other

Bituminous



0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*


Indonesian Coal Exports by destination, 2000-2014

*2014 annualised from Jun’14

South Korea

Taiwan

JapanIndia & Pakistan

China

Other

?


US prospects as a supplier

0

10

20

30

40

50

60

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

Mil

lio

n t

on

ne

s

Total US Coal Exports, 2001-2014

Sources: globalCOAL, IHS

Evolution of US Coal Exports by Destination, 2005-2035

0

10

20

30

40

2005 2015 2025 2035

Mil

lio

n t

on

ne

s

Pacific

Atlantic



Colombia

Total Colombian Steam Coal Exports by Destination, 2000-2014

0

20

40

60

80

100

120

2000 2005 2010 2015 2020 2025 2030 2035 2040

Mil

lio

n t

on

ne

s

0

20

40

60

80

100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

Mil

lio

n t

on

ne

s

Sources: globalCOAL, IHS

Europe

Far EastAmericas

*2014 annualised from Sep’14

Evolution of Colombian Coal Exports, 2000-2040

Changes in the derivatives market


2014 derivatives market snapshot

API#22.5Bt

API#4500Mt

NEWC278Mt

API#834Mt

S/B Indo18Mt


Significant growth in derivatives

*2014 annualised from Sept’14

Sources: globalCOAL, ICE, CME, SGX, EEX, FSA, LEBA

Growth in Coal Derivatives Volume, 2001-2014

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 *

Mil

lio

n t

on

ne

s

∆+6.6%


Growth in clearing vs OTC


Sources: globalCOAL, ICE, CME, SGX, EEX, FSA, LEBA

Cleared and OTC Derivatives Volumes Growth, 2001-2014

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

500

1000

1500

2000

2500

3000

3500

4000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 *

% C

lear

ed

Mil

lio

n t

on

ne

s

Cleared OTC % Cleared (right axis)


A maturing market

0%

5%

10%

15%

20%

25%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2011 2012 2013 2014*

% O

pti

on

s

Mil

lio

n t

on

ne

s

Futures Options % Options (Right axis)


Sources: globalCOAL, ICE, CME, SGX, LCH

Cleared Futures vs Options Derivatives Volumes, 2011-2014


Pacific lag

Sources: globalCOAL, ICE, CME, SGX, LCH, Euracoal

Atlantic Market Pacific Market

0

500

1,000

1,500

2,000

2,500

3,000

Physical Financial

Mil

lio

n t

on

ne

s

0

500

1,000

1,500

2,000

2,500

3,000

Physical Financial

Mil

lio

n t

on

ne

s


Commodity churn ratios

0

20

40

60

80

100

120

140

160

180

200

220

Pacificcoal

All coal Atlanticcoal

Cocoa Coffee Wheat Gas Oil Copper Crude Oil Henry HubGas

Sources: globalCOAL & others

Various Commodity Churn Ratios

The changing nature of market participants


Financial institutions withdraw

Source: globalCOAL

Percentage of globalCOAL Volume by Participant Type, 2006-2014

0%

10%

20%

30%

40%

50%

60%

70%

2006 2007 2008 2009 2010 2011 2012 2013 2014

Rise of the commodity trader

Withdrawal of the Banks

Utility Traders Miners & Others


Some conclusions…

• As European demand stalls, trade turns towards growth markets in the East

• Market preference for cleared derivatives increases as appetite for exposure to risk continues to decline

• Pacific trade in derivatives continues to trail Atlantic market

• Changing nature of market participants as banks depart commodity markets and commodity traders increase activity

CONTACT US

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[email protected]

Date post:	13-Jul-2015
Category:	Economy & Finance
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Changing nature of seaborne thermal coal markets

Economy & Finance