Commodity market report
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106 Pages

Global thermal coal long-term outlook H1 2014


Global thermal coal long-term outlook H1 2014

Report summary

Global demand for thermal coal will grow by 4.5 Bt to a total of 11.9 Bt owing to electrification and industrial expansion in Asia and the significant cost advantage maintained by coal over other fuels.  There will be a growing need for imports.  Seaborne thermal coal demand in Asia will grow by 1 Bt over the forecast period to reach 2.0 Bt.   Oversupply will continue until supply and demand finally balance in 2019/2020.  Prices are at multi-year lows and recovery will be an extended process.

What's included?

This report includes 30 file(s)

  • Global thermal coal long-term outlook H1 2014 PDF - 2.77 MB 106 Pages, 22 Tables, 91 Figures
  • CMS Thermal Coal Exec Summ Key Themes data July.xls XLS - 594.50 KB
  • CMS Thermal Coal Demand overview data July.xls XLS - 1.95 MB
  • CMS Thermal Coal Economic assumptions data July.xls XLS - 173.00 KB
  • CMS Thermal Coal Prices data July.xls XLS - 607.00 KB
  • CMS Thermal Coal Infrastructure overview data July.xls XLS - 2.49 MB
  • CMS Thermal Coal SDBalance Risks data July.xls XLS - 8.11 MB
  • CMS Thermal Coal Supply overview data July.xls XLS - 7.07 MB
  • CMS Thermal Region Americas Brazil data July.xls XLS - 270.00 KB
  • CMS Thermal Region Americas Chile data July.xls XLS - 1.03 MB
  • CMS Thermal Region Americas Mexico data July.xls XLS - 2.31 MB
  • CMS Thermal Region Asia China data July.xls XLS - 808.00 KB
  • CMS Thermal Region Asia Hong Kong data July.xls XLS - 310.50 KB
  • CMS Thermal Region Asia India data July.xls XLS - 313.00 KB
  • CMS Thermal Region Asia Japan data July.xls XLS - 1.04 MB
  • CMS Thermal Region Asia Malaysia data July.xls XLS - 1.54 MB
  • CMS Thermal Region Asia Philippines data July.xls XLS - 1.52 MB
  • CMS Thermal Region Asia South Korea data July.xls XLS - 527.50 KB
  • CMS Thermal Region Asia Taiwan data July.xls XLS - 428.50 KB
  • CMS Thermal Region Asia Thailand data July.xls XLS - 1.63 MB
  • CMS Thermal Region Asia Vietnam data July.xls XLS - 1.88 MB
  • CMS Thermal Region EMEARC Belgium data July.xls XLS - 256.50 KB
  • CMS Thermal Region EMEARC France data July.xls XLS - 3.30 MB
  • CMS Thermal Region EMEARC Germany data July.xls XLS - 3.10 MB
  • CMS Thermal Region EMEARC Italy data July.xls XLS - 3.74 MB
  • CMS Thermal Region EMEARC Netherlands data July.xls XLS - 1.36 MB
  • CMS Thermal Region EMEARC Spain data July.xls XLS - 2.31 MB
  • CMS Thermal Region EMEARC Turkey data July.xls XLS - 2.03 MB
  • CMS Thermal Region EMEARC United Kingdom data July.xls XLS - 3.17 MB
  • CMS Thermal Coal Ocean freight and trade data July.xls XLS - 3.26 MB

Description

Global coal markets are facing extraordinary challenges and uncertainties. Factors such as global overcapacity, weakening demand and falling prices have created cautious investors. These factors have caused delays and cancellations of many mine and infrastructure projects, as well as lower growth rates at others.

This Thermal Coal Market Long Term Outlook report gives global and regional coal producers, consumers, transporters and investors detailed supply, demand and price forecasts for the coal industry, covering all the key domestic markets in North America, China and India.

Use this report to gain a better understanding of market dynamics, including revenue and demand potential for different coals. It will also help you identify trade patterns and changes affecting the thermal coal markets.

Wood Mackenzie is the only coal industry service provider that offers a market outlook integrated with other sector analyses, including macroeconomics, coal supply, steel markets and gas and power markets. Our coal analysts are based in the markets they analyse. They work with objective, proprietary data to help you maximise your current and future investments.

From market dynamics to trade patterns, we give you confidence in your strategic planning.

  • Executive summary
    • Seaborne demand is tied to Asian economic growth
    • Oversupply, made worse by market distorting contracts, will persist for several years
      • Thermal seaborne exports by major exporter (Mt)
      • Global seaborne exports change by coal rank between 2014 – 2035 (Mt)
    • Prices will recover slowly through the mid-term then rise to incentivize new production
      • Thermal coal price forecast, FOB port (US$/t, real 2014)
    • Current oversupply is slowing port development; new capacity needed in the long term
    • Trade flow will increase, centre in Asia and widen to include new sources
      • Traded coal volumes will increase especially in Asia
      • The centre of gravity of thermal coal trade flow will continue to rapidly shift toward Asia
      • Asian production limits will trigger frontier supply development and subsequent trade flow change
      • The clean energy push will lessen European coal trade … and there are rumblings elsewhere
      • Over time, key Atlantic suppliers will exit Europe in favour of Asian markets
      • Indian power market reform will open the door for increased imports
      • Consumption of low rank coal will increase
      • Stranded US coal will seek global markets, but inadequate delivery options threaten
      • Landborne trade volume will grow, but remain trivial in comparison to seaborne totals
    • Most coal demand is satisfied using local supply, but imports are growing substantially
    • Important risks to our forecast centre around demand and supply in China
    • Change from previous outlook
      • FOB price forecast comparison, H1 2014 vs. H2 2013, $/t
  • Economic outlook
    • Economic growth returns but long term uncertainties remain
  • Supply
    • Abundant new, low cost production will be developed, yet marginal costs will rise
      • Seaborne thermal coal export cash cost supply curve (2014, US$/t)
    • Australia supply outlook
      • Australia – seaborne thermal exports by demand country (Mt)
    • Colombia supply outlook
      • Colombia – seaborne thermal exports by demand country (Mt)
    • Indonesia supply outlook
    • Indonesian thermal coal production breached the half billion tonne mark in 2013 reaching 501 Mt, an impressive 47 Mt year-on-year increase, of which 396 Mt were exported. Major producers, including Bumi, Adaro and Banpu, ramped up production as they sought to reduce their average fixed cost. Major producers accounted for close to one-half the production increase in 2013. Despite the clampdown on small and illegal mines early last year, these mines still managed to increase their output by 13 Mt. In 2014, we expect production growth to slow to 38 Mt, with total thermal coal production reaching 534 Mt.
    • Russia supply outlook
    • South Africa supply outlook
    • US supply outlook
  • Demand
    • Relentless Asian demand will drive a growing seaborne market
    • Pacific demand outlook
      • China demand outlook
      • India demand outlook
      • Japan demand outlook
      • Taiwan demand outlook
      • Other Asia demand outlook
    • Americas demand outlook
    • EMEARC demand outlook
      • Phase 1: Pre-Industrial Emissions Directive (IED), 2014-2017
      • Phase 2: Industrial Emissions Directive (IED) and beyond, 2018-2035
      • Germany demand outlook
      • Germany - power generation by fuel type (TWh)
      • Turkey demand outlook
      • Turkey - thermal coal supply/demand balance (Mt)
      • Other EMEARC demand outlook
      • Trade outlook for other EMEARC importers (Mt)
  • Infrastructure
    • Ocean freight outlook
    • Infrastructure outlook at major suppliers
      • Australia
        • Abbot Point
        • Port of Brisbane
        • The Port of Gladstone
        • The Port of Hay Point
        • The Port of Newcastle
        • Port Kembla
      • Canada
      • Colombia
      • Indonesia
      • Mozambique
      • Russia
      • South Africa
      • Unites States
  • Supply-demand balances
    • Global summary
  • Trade
    • Evolving trends in coal trade
      • Traded coal volumes will increase as spot sales increase and cash-strapped miners look for profits and risk avoidance
      • The centre of gravity of thermal coal trade flow will continue to rapidly shift toward Asia
      • Asian production limits will trigger frontier supply development and subsequent trade flow change
      • The clean energy push will lessen European coal trade … and there are rumblings elsewhere
      • Over time, key Atlantic suppliers will exit Europe in favour of Asian markets
      • Indian power market reform will open the door for increased imports
      • Consumption of low rank coal will increase
      • Stranded US coal will seek global markets, but inadequate delivery options threaten
      • Landborne trade volume will grow, but remain trivial in comparison to seaborne totals
      • Long-term infrastructure development may increase price volatility
  • Prices
    • Summary
    • Oversupply will persist but modest price growth will track episodic removal of market distorting elements
      • Phase I: 2014-2020
      • Seaborne thermal marginal cost versus Newcastle spot price (US$/t, nominal)
    • Long-term prices will escalate in bursts to incentivize development of new supply
      • Phase II: 2021-2035
      • Breakeven costs at different IRRs for Australian thermal projects (adjusted to 6,000 kcal NAR)
      • Thermal coal price forecast, FOB port (US$/t, real 2014)
    • JPU contract importance will decline as the seaborne market centres in China
      • JPU coal: supply and Japanese consumption as a share of total supply (Mt and %)
    • Changes from prior outlook
  • Risks and uncertainties
    • Summary
    • Further Chinese coal demand weakness
    • Saturation of coastal China demand and domestic supply growth meets demand
    • Unwinding Quantitative Easing (QE) and exchange rate fluctuations
    • European decarbonisation efforts and gas supply diversification
    • Indonesian exports: controlling illegal mining and capping exports via dedicated ports
    • US West Coast terminals delayed / blocked / unsupported
    • EPA’s proposed clean power plan
    • India coal and power sector reforms
    • Alternative power supply sources and technology development

In this report there are 113 tables or charts, including:

  • Executive summary
    • Executive summary: Table 1
    • Executive summary: Image 1
    • Executive summary: Table 2
    • Executive summary: Image 2
    • Executive summary: Image 3
    • Executive summary: Image 4
    • Thermal coal price forecast, delivered (US$/t, real 2014)
    • Major seaborne thermal coal trade flows (Mt)
    • Global thermal coal supply demand balance (Mt)
    • Risks and uncertainties
    • Executive summary: Table 5
    • Global change in supply, H1 2014 vs. H2 2013, Mt
    • Executive summary: Image 7
    • Delivered price forecast comparison, H1 2014 vs. H2 2013, $/t
  • Economic outlook
    • Economic outlook: Table 1
    • Economic outlook: Table 2
    • Economic outlook: Table 3
  • Supply
    • Seaborne thermal coal exports by country (Mt)
    • Supply: Table 1
    • Supply: Image 2
    • Supply: Image 3
    • Supply: Image 4
    • Supply: Image 5
    • Supply: Table 2
    • Supply: Image 6
    • Supply: Image 7
    • Indonesia - seaborne thermal coal exports by demand country (Mt)
    • Western Russia ports - seaborne thermal coal exports by demand country (Mt)
    • Eastern Russia ports – seaborne thermal exports by demand country (Mt)
    • Supply: Image 11
    • US - seaborne thermal exports by demand country (Mt)
  • Demand
    • Global thermal coal demand for electricity generation by region (Mt)
    • Global thermal coal demand for non-power market segments by region (Mt)
    • Share of thermal coal demand from domestic production by region (%)
    • Global seaborne thermal coal import demand by rank (Mt)
    • Change in global seaborne thermal coal demand by country and rank 2014-2035 (Mt)
    • Growth in coal- and non-coal-fired generation capacity in the Pacific basin (GW)
    • Share of coal in electricity generation in the Pacific basin (%)
    • Thermal coal supply/demand balance (Mt)
    • Power generation by fuel type (TWh)
    • Coal consumption by sector (Mt)
    • China - seaborne imports by country and rank (Mt)
    • Thermal coal supply/demand balance (Mt)
    • Power generation by fuel type (TWh)
    • Coal consumption by sector (Mt)
    • India - seaborne imports by country and rank (Mt)
    • Demand: Table 4
    • Power generation by fuel type (TWh)
    • Coal consumption by sector (Mt)
    • Japan - seaborne imports by country and rank (Mt)
    • Demand: Table 5
    • Power generation by fuel type (TWh)
    • Coal consumption by sector (Mt)
    • South Korea - seaborne imports by country and rank (Mt)
    • Demand: Table 6
    • Power generation by fuel type (TWh)
    • Coal consumption by sector (Mt)
    • Taiwan - seaborne imports by country and rank (Mt)
    • Thermal coal supply/demand balance (Mt)
    • Southeast Asia installed capacity by fuel type (GW)
    • Southeast Asia - seaborne imports by country and rank (Mt)
    • Coal plant net additions/retirements for European majors*: 2008-2035
    • European seaborne thermal coal demand by exporter (Mt)
    • Demand: Table 7
    • Demand: Image 27
    • Germany - power generation capacity by fuel type (GW)
    • Germany - thermal coal consumption by market sector (Mt)
    • Germany - thermal seaborne imports by country and rank (Mt)
    • Demand: Table 8
    • Turkey - power generation by fuel type (TWh)
    • Turkey - power generation capacity by fuel type (GW)
    • Turkey - thermal coal consumption by market sector (Mt)
    • Turkey - thermal seaborne imports by country and rank (Mt)
    • Demand: Image 35
  • Infrastructure
    • Net Increases in vessel fleet (Mdwt)
    • Dry bulk trade net Increase (Mt) and 4TC Average Baltic Cape size Index
    • Infrastructure: Image 3
    • Infrastructure: Image 4
    • Infrastructure: Image 5
    • Infrastructure: Image 6
    • Abbott Point port capacity forecast (Mt)
    • Brisbane port capacity forecast (Mt)
    • Gladstone port capacity forecast (Mt)
    • Infrastructure: Image 10
    • Newcastle port capacity forecast (Mt)
    • Port Kembla port capacity forecast (Mt)
    • Canada west port capacity forecast (Mt)
    • Colombia Atlantic port capacity forecast (Mt)
    • Infrastructure: Image 15
    • Mozambique port capacity by port (Mt)
    • Infrastructure: Image 17
    • Russia port capacity (Mt)
    • Infrastructure: Image 19
    • Russia East port capacity forecast (Mt)
    • South Africa port capacity forecast (Mt)
    • US port capacity by port (Mt)
    • US Gulf, New Orleans and others forecast (Mt)
    • US west port capacity forecast (Mt)
  • Supply-demand balances
    • Supply-demand balances: Table 1
    • Supply-demand balances: Table 2
  • Trade
  • Prices
    • Prices: Image 1
    • Prices: Table 1
    • Prices: Image 2
    • Seaborne demand “looseness” versus FOB Newcastle price
    • Prices: Image 4
    • Prices: Image 5
    • Thermal coal price forecast, delivered (US$/t, real 2014)
    • Prices: Image 7
    • Global demand change, H1 2014 vs. H2 2013
    • Export supply change, H1 2014 vs. H2 2013
    • FOB Newcastle market price comparison, H1 2014 vs. H2 2013
  • Risks and uncertainties
    • Risk assessment: H2 2013
    • Risk Assessment: H1 2014
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