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© OECD/IEA 2016 IEA’s Medium Term Coal Market Report 2016
© OECD/IEA 2016
IEA’s Medium Term Coal Market Report 2016
© OECD/IEA 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
© OECD/IEA 2016
Coal consumption has decreased in North America and Europe while increasing strongly in Asia
The coal world is becoming completely asymmetrical
25%
22%
46%
4%
2%
1%
20002015
1%
12%
3%
10%
73%
The shift of coal to Asia is accelerating
© OECD/IEA 2016
High prices, but low expectations
Thermal coal prices doubled mostly pushed by Chinese supply cut, but the market players expect the trend to reverse
Price of thermal coal
0
10
20
30
40
50
60
70
80
90
100
Jan
-14
May
-14
Sep
-14
Jan
-15
May
-15
Sep
-15
Jan
-16
May
-16
Sep
-16
Jan
-17
May
-17
Sep
-17
Jan
-18
May
-18
Sep
-18
Jan
-19
May
-19
Sep
-19
Jan
-20
May
-20
Sep
-20
$/t
© OECD/IEA 2016
Does China set the global prices?
The large arbitrage in the southern import ports between domestic and imported coal is key to determines prices – in China and elsewhere
Domestic coal from northern ports
Imports
Imports
Net outbound
Net inbound
© OECD/IEA 2016
Global coal demand: from growth to plateau
Largest growth will be in India and ASEAN region Largest decline will be in US and Europe Largest uncertainty is China
0
1000
2000
3000
4000
5000
6000
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
Mtc
e
China
IndiaSoutheast AsiaUnited StatesEuropean Union
India
Southeast Asia
United States
China
European Union
Rest of world
Historical and forecast coal demand by region
© OECD/IEA 2016
Coal consumption in China in the future: a flat trajectory
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Mtce
Cement
Steel
Electricity
NuclearHydroSolar+Wind
Demand forecast
Demand without
rebalancing
Rebalancing of the economy and the increasing share of generation from hydro, nuclear and other renewables flatten the projection
Impact of diversification and economic rebalancing on Chinese coal demand
© OECD/IEA 2016
Who is hitting US coal?
Coal power generation has largely been replaced by gas generation But energy efficiency and wind were also significant
- 800
- 700
- 600
- 500
- 400
- 300
- 200
- 100
0
Coal DemandOil,
Hydro,
Nuclear
Wind Solar Natural Gas
TWh
2006–2015 change in power generation in the US
© OECD/IEA 2016
China: giving access to electricity
After successful electrification at home, Chinese companies are building new coal-fired power plants in numerous countries.
Countries where coal plants have been announced or built by Chinese companies
© OECD/IEA 2016
Coal trade forecast: all eyes on China and 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
Coal imports to selected countries
0
50
100
150
200
250
300
350
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Mt
Viet Nam France Japan India China
© OECD/IEA 2016
CCS: few steps, no strides.
Despite concrete progress on CCS, only 0.06% of coal-based CO2 emissions are captured
Strong action from governments is urgently needed
Kemper County3 Mt CO2
Petra Nova1.4 Mt CO2
Boundary Dam1 Mt CO2
Great Plains Synfuel3 Mt CO2
Coal related CO2 emissions in 2015: 14 000 Mt
Large-scale coal-based CCUS projects in the world
© OECD/IEA 2016
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 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
© OECD/IEA 2016
Medium Term Coal Market Report 2016
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