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Global coal demand is set to return to its all-time high in 2022

The world’s consumption of coal is set to rise slightly in 2022, taking it back to the record level it reached nearly a decade ago, according to an IEA report published recently which notes that significant uncertainty hangs over the outlook for coal as a result of slowing economic growth and energy market turbulence.

Based on current economic and market trends, global coal consumption is forecast to rise by 0.7% in 2022 to 8 billion tonnes, assuming the Chinese economy recovers as expected in the second half of the year, the IEA’s July 2022 Coal Market Update says. This global total would match the annual record set in 2013, and coal demand is likely to increase further next year to a new all-time high. The new report highlights the significant turmoil in coal markets in recent months, which has important implications for many countries where coal remains a key fuel for electricity generation and a range of industrial processes. At the same time, the world’s continued burning of large amounts of coal is heightening climate concerns, as coal is the largest single source of energy-related CO2 emissions. Worldwide coal consumption rebounded by about 6% in 2021 as the global economy recovered rapidly from the initial shock of the Covid pandemic. That sharp rise contributed significantly to the largest ever annual increase in global energy-related CO2 emissions in absolute terms, putting them at their highest level in history.

Dry Bulk Market: Coal Trade a Boon for Bulkers

Coal imports of up to 40 million tons, coming into the EU from Russia, need to be replaced from other sources. This could present a significant opportunity for the dry bulk market. In its latest weekly report, shipbroker Intermodal said that “amid the upcoming ban on Russian coal from the EU, which will be in full effect on August 10th, EU nations have been accelerating their coal imports as a direct reaction to the threat of a reduction in gas supply from Russia. The ban comes at a time when coal trade is already tight. As a result, thermal coal prices have been surging on the back of tight supply and geopolitical tensions”. According to Intermodal’s Research Analyst, Ms. Chara Georgousi, “considering that the EU was importing approximately 35-40mn tonnes/ year from Russia, these cargoes need to be supplied from elsewhere, namely US, Australia, South Africa, and Colombia. US accounts for the largest exporter of thermal coal to Europe at the moment, with exports surging to 11.2mn tonnes during 1H22, noting a 91.6% y-o-y increase. Amid intensified sanctions, US Government is exerting pressure on miners to increase production, therefore, trade flows from US to EU ports (mainly Netherlands and Germany) are expected to increase within 2H22”.

Seaborne Coal Market Growing

The global seaborne coal market has grown yet again, over the course of the first half of 2022, following the significant rise of 2021. In its latest weekly report, shipbroker Banchero Costa said that “following a disastrous 2020, with the world hit by lockdowns and recession pretty much everywhere, global seaborne coal trade managed to rebound to some extent in 2021. In the full 12 months of 2021, global seaborne coal exports increased by +4.5% y-o-y to 1149 mln tonnes, from 1099 mln tonnes in 2020, according to vessels tracking data from Refinitiv. This however was still well below the levels we had in pre-Covid times, being -10.0% down from the 1276 mln tonnes shipped during 2019. In the first half of 2022, global coal trade was a bit of a mixed picture. In the January to June period of 2022, global coal loadings increased by +1.5% y-o-y to 572.7 mln t, from 564.1 mln t in the first half of 2021, but still well below the 637.9 mln t in 1H 2019. According to the shipbroker, “the European Union is now the fifth largest seaborne importer of coal in the world, after India, China, Japan and South Korea. In 1H 2022, the EU accounted for 10.4% of global seaborne coal shipments. The EU’s seaborne coal imports in the 12 months of 2021 increased by +30.3% y-o-y to 87.1 mln tonnes. This was mostly a rebound from a massive -32.9% y-o-y decline in 2020 caused by Covid lockdowns. Previous years also saw a negative trend, with European coal imports declining by -18.3% y-o-y in 2019 and by -7.6% y-o-y in 2018, as European countries progressively abandon coal as a source of energy and embrace natural gas and renewables. In the first 6 months of 2022, coal imports into the EU further increased by +49.6% y-o-y to 57.6 mln tonnes. Europe accelerated its coal imports as a direct reaction to the threat of a reduction in gas supply from Russia. This compensated for the sharp drop in demand from Mainland China.

Australia’s resources exports break records amid global energy crisis

Australia’s mining and energy exports are expected to have hit a record-high of more than $400 billion as the fallout from Russia’s invasion of Ukraine deepens global shortages of coal and natural gas and sends commodity prices soaring. Federal government trade data to be released reveals a 26 per cent increase in export earnings in the past financial year, from $320 billion in 2020-21 to an estimated $405 billion.Earnings from coal and liquefied natural gas (LNG) – the nation’s second and third-largest exports – have

both more than doubled in the past 12 months, the trade figures reveal. The longer-term outlook for coal, however, remains deeply uncertain and will depend largely on how aggressively countries seek to decarbonise their economies by shifting to cleaner sources of energy.

. China is planning for lifting ban on China Australia coal Trade

China's coal trade with Australia still has "huge potential", increasing domestic production, imports from Russia and an emphasis on an uncompetitive price could potentially lift its unofficial ban on the world's biggest buyer. In late 2020, as tensions escalated between Beijing and Canberra, China imposed an informal ban on Australian coal, effectively ending imports from the country's once-important supplier. However, as tensions begin to ease amid concerns that global coal supplies could harden as the impact of Western-led sanctions on Russian energy exports, some Chinese bureaucrats are reportedly proposing that Senior leaders lift the ban. After a few years of sporadic diplomatic and business contact, it is possible to lift the ban, and the rhetoric favors it. Senior ministers of the new Australian government met with their counterparts in Beijing.

Queensland's 2022 coal exports poised for decline

Australia's Queensland coal shipments are on track for a third straight year of decline, as wet weather disrupts supply, and China's Covid-19 lockdowns and inflation curtail demand. Shipments from the four largest coal ports in Australia's Queensland were at 17.36mn t in June, down by about 1mn t compared to a year earlier, despite drier weather after a wet May. The ports shipped 94.33mn t in January-June, down from 99.65mn t a year earlier, putting them on track to dispatch less coal in 2022 than the 197.29mn t shipped in 2021 and the peak of 219.24mn t in 2019.

. . Australia regulator calls for fast transition, citing coal failures and prices

The Australian Energy Market Operator has called for an accelerated shift to wind and solar, backed up by batteries and other storage, as a devastating combination of coal plant failures and soaring fossil fuel costs and bidding changes pushed electricity prices to unprecedented levels in the June quarter. Its latest Quarterly Energy Dynamics report paints a bleak picture of the risks of relying on legacy fossil fuel industry, prone to outages, plant failures, soaring fuel costs, and bidding patterns that combined to push the price of electricity to unsustainable levels.

Indonesia set to boost coal output to fill Russia supply gap

Indonesia, the world's biggest exporter of coal used in power plants, will be able to increase output to help meet demand from countries that have lost supplies from Russia, its energy minister said. Countries, which he declined to name, had asked Indonesia for coal in the wake of sanctions on Russia for its invasion of Ukraine, which Moscow calls a "special military operation". "We will help every country who are short of this kind of material as much as we can," Energy and Mineral Resources Minister Arifin Tasrif said during an interview with Reuters on the ulInternational Energy Agency. Indonesia's target for coal output this year is 663 million tonnes. The minister did not say by

how much that target might be raised. "We have the resources. If we look at the balance, we have to increase our production," he said, adding that miners are obliged to reserve 25 per cent for the domestic market.

Indonesian coal miners mull revising 2022 production targets downwards

Indonesian thermal coal miners are mulling lowering their production targets for 2022 because of unavailability of heavy equipment and unseasonal rains, sources told S&P Global Commodity Insights. “We are discussing a revision of the production plan that we submitted to the government to lower it for this year because the heavy machinery we require is not available,” one Indonesia-based producer said. “There is no penalty in producing lower volume than what you submitted as per the plan at the start of the year, but if one produces less volume, the approval for next year could be lower,” the producer said. Another producer said that machinery had not been arriving in a timely manner since the start of the year, forcing miners to recalibrate production numbers.

China's imports of Russian coal rise 22% due to cheaper cargoes

China’s coal imports from Russia rose 22% in June from a month ago despite a decline in its total coal purchases, as traders were drawn to discounted cargoes following western sanctions on Moscow over the war in Ukraine. The world’s biggest consumer of the fossil fuel brought in 6.12 million tonnes of coal from Russia last month, data from the General Administration of Customs showed. That compares with 5.01 million tonnes in May and 5.24 million tonnes in June 2021. China has been increasing coal imports from Russia since March, when global coal prices soared to record highs but Russian cargoes were traded at steep discounts as western allies weaned themselves away from doing business with Moscow after Russia attacked Ukraine.

EU cuts down Russian coal imports ahead of bloc-wide ban

The EU has drastically scaled back its imports of Russian thermal coal ahead of a full ban next month, compounding fears over an intensifying energy crisis in the bloc. Just 1.7mn tonnes of Russian coal, used for power generation, were shipped by sea to the EU in June, a decline of 48 per cent compared with May as western powers extended their punitive measures against Moscow following its invasion of Ukraine. That marked the biggest monthly drop since at least 2019, according to commodity consultants CRU. Europe receives most of its coal through the port of Rotterdam.

. U.S. Should Begin Exporting More Coal to European Nations

Against the backdrop of war in Ukraine, U.S. coal shipments to Europe are playing a quiet yet critical role in keeping the lights on from Rome to Amsterdam. If the shipments continue through the winter — and are ramped to replace the loss of Russian fuel — they will save millions of people from freezing in the dark. Although the U.S. has been supplying Europe with more gas, principally LNG, its cost has soared and not nearly enough LNG can be produced in the U.S. in the near term to meet Europe’s needs. So U S coal is serving as a replacement fuel, saving Europe from potentially severe electricity and heating shortages, while enabling the allies to achieve a modicum of energy independence. Coal, because it is cheap and abundant, is a

great boon for energy-strapped Europe. U.S. coal exports to Europe rose more than 140 percent in May compared to a year earlier — and they are continuing at that increased level, because Europe desperately needs coal for electricity generation to supplant Russian gas that stopped flowing due to sanctions against Russia for its unprovoked invasion of Ukraine. By October, however, US coal shipments will need to grow much higher than they already are so that enough fuel will be available before winter sets in

U.S. refined coal production and consumption declines with the expiration of a tax credit

Refined coal production in the United States dropped to nearly zero during the first quarter of 2022 as refined coal consumers used their remaining small stockpiles. Refined coal is most commonly made by mixing proprietary additives to feedstock coal. At the end of 2021, the refined coal production tax credit (created by the American Jobs Creation Act of 2004) expired, which could be affecting refined coal production and consumption. Additives are used in refined coal to help capture emissions when the coal is burned. For example, these additives increase mercury oxides, which technologies—such as flue gas desulfurization scrubbers and particulate matter control systems—can then capture. Without these additives, ash would not capture much of the elemental mercury in coal, which would instead be released into the environment. The production tax credit helped coal-fired electric power plants reduce these emissions. Refined coal production facilities could claim the tax credit for up to 10 years, but they had to meet certain conditions

. US Coal Prices Are Breaking Records, But Production Is Dropping

Coal production is up from last year, but dramatically higher prices are not translating to a similar increase in supply. U.S. coal production is up six percent from the first quarter of 2021, according to federal data from the Energy Information Administration. But most of that growth was in Western states. West Virginia coal production was up 3.6 percent in the first three months of the year, while Appalachian coal production was down 1.2 percent. Coal is bringing in record prices: $168 a ton for Central Appalachian coal, and $141 a ton for Northern Appalachian coal, more than double what they were a year ago. Illinois Basin coal is $190 a ton on the spot market, up from about $35. Still, U.S. coal consumption fell four percent in the first quarter of 2022 from the first quarter of 2021. And exports of U.S. coal used to make electricity and steel both fell in the first quarter of 2022 from the fourth quarter of 2021.

Global Underground Mining Equipment Market to Settle at 6.8% Growth Rate by 2022-28

Underground Mining Equipment is the mining equipment used in the underground. Underground mining is a technique used to access ores and valuable minerals in the ground by digging into the ground to extract them.The global Underground Mining Equipment market size is projected to reach US$ 36250 million by 2028, from US$ 22750 million in 2021, at a CAGR of 6.8% during 2022-2028. Global Underground Mining Equipment key players include Caterpillar, Komatsu (Joy Global), Volvo, Hitachi Construction Machinery, Sandvik, etc. Global top five players hold a share about 50%. North America is the largest market, with a share about 30%, followed by Europe, having a share about 25 percent.In terms of product, Longwall is the largest segment, with a share about 75%. And in terms of application, the largest application is Coal Mining, followed by Metal Mining, Mineral Mining.