Thermal coal prices are expected to rise in 2021: Aussie report

Coal Insights Bureau

Thermal coal prices are expected to rise in 2021 driven by an increase in seaborne thermal coal demand as the global economy recovers, says a report by the Australian industry ministry.

However, longer-term trends will constrain the extent of the rise: Europe and South Korea are looking to reduce thermal coal consumption, while the world’s two largest consumers (China and India) have signaled their intention to reduce thermal coal imports by increasing domestic production, the Australia Resources and Energy Quarterly – September 2020 said.

The Resources and Energy Quarterly is brought out by the Office of the Chief Economist and contains forecasts for the value, volume and price of Australia’s major resources and energy commodity export.

Growing demand from South and Southeast Asia should help to offset declining thermal coal imports elsewhere. Competition from LNG is also expected to weigh on thermal coal demand, especially while LNG prices remain near record lows in spot and short-term contract markets.

In 2021 and 2022, global thermal coal import demand is expected to grow weakly, as the world economies rebound from the impacts of Covid-19.

But the shift away from coal in power generation in some countries, combined with the drive for self-sufficiency in others, is expected to keep world trade in thermal coal below 2019 levels during the outlook period.

India to trigger 2020 coking coal trade fall by 12%

World metallurgical coal trade is forecast to fall by 41 million tons (mt) or 12 percent to 296 mt in 2020.

India alone is expected to account for around half of the fall, with the rest of the decline spread across some other major steel producers, such as Europe and Japan.