Strong demand from China and India have propelled European thermal coal prices to over $100 a ton – its highest peak in two years.
South African coal; normally exported to Europe; has largely been redirected to satisfy demand from Beijing. As a result, Europe has become more dependent on imports from Colombia and Russia, both of which have reduced their exports.
“Chinese strong imports are supporting coal prices globally,” notes Amrita Sen, coal analyst at Barclays Capital, and this trend shows no sign of slowing down. For the first time last year, China become a net coal importer, with an estimated 110 million tons purchased overseas this year.
By next year, analysts expect China to overtake Japan as the world’s largest importer of coal, with net imports of approximately 122 million tons. By 2019, India is expected to supplant China as top importer with a predicted 182 million net coal imports.
“The global coal trade will grow significantly during the next few decades, with total thermal seaborne coal demand set to increase from 680 million tons to 1,187 million tons between 2010 and 2025,” said Jeff Watkins, head of coal at Wood Mackenzie, noting further growth will be “concentrated in the Pacific basic, driven by continued economic development in some of the world’s largest economies.” Read more…