Global

Coal exports to plunge 80pc if world stays below 1.5 degrees, RBA says

As per the analysts, coal exports and, to some extent, gas shipments could plunge by as much as 80 per cent if China, Japan and South Korea take an aggressive approach to decarbonising their economies by mid-century.

That figure would be consistent with keeping the planet’s temperatures from heating by more than 1.5 degrees, the level at which scientists say the effects of climate change become irreversible and catastrophic.

The report highlights both the costs and opportunities to Australia of the pledged shift away from fossil fuels by the world’s biggest emitters, as well as huge question marks about the different potential trajectories. Using climate scenarios that have been developed by a consortium of central banks trying to improve climate risk management, the Reserve Bank’s analysis maps out four possible worlds.

They are: net zero where global warming is limited to 1.5 degrees; a world in which warming is allowed to reach 2 degrees; a scenario in which all the pledges to cut emissions by countries as of December become reality; and the current set of policies of countries around the globe.

Chinese coal firms meet to address winter supply challenges

Major Chinese coal producers are trying to resolve supply shortages and curb price rises as the country’s winter consumption peak approaches, an industry association said.

The China Coal Transportation and Distribution Association said in a notice that the state-owned China

Energy Investment Corp met with several other top producers to discuss ways to guarantee winter power supplies.

The association said rising market prices had put buyers under pressure, but suppliers were also facing “operating difficulties” as they try to fulfil contracted deliveries at a discount.

With coal demand set to surge as temperatures drop, China’s state planning body said that it would send investigators to the regions to ensure that supply and price stabilization measures were implemented properly.

Coking coal price hits record highs as Chinese steel-makers face pain

The price of metallurgical coal has risen to record levels as trade tensions and border problems push the cost for Chinese importers sky-high.

Coal for coking purposes has soared despite declines in iron ore values attributed to Chinese steelmakers abiding by a government directive to avoid buying from Australia.

The value has surged to $US410 a tonne in the past week, representing a more than tripling in price since early 2020.

Coking coal is now overtaking iron ore as the largest input cost for many of the world’s steel mills.

With poor domestic supplies of metallurgical coal, Chinese buyers were racing to source shipments from across Asia, North America and as far afield as Columbia as a result.

China bans coal trading firm from publishing daily price indexes

The National Development and Reform Commission (NDRC) said Yulin Coal Trading Centre Corp was publishing untrue pricing information, and that the company was not authorised to collect, edit and publish news and information.

The NDRC has shut down Yulin's pricing indexes and two Wechat accounts it managed, and asked the firm not to publish any untrue coal market information on any channel.

The move follows new guidelines from Beijing for managing price indexes for commodities and services, and that say regulators will suspend the activities of any price providers failing to comply with certain rules.

Yulin Coal Trading Centre Corp, founded in 2009, is mainly involved in physical coal trading, logistics and consulting business. Until the ban, it published daily spot coal prices for Yulin city and nearby regions. Coal production in Yulin accounts for about 13% of China's total coal output.

Australia’s coal mines risk becoming stranded after 2030

Australia’s coal mines are at risk of becoming stranded assets under three out of four scenarios that consider how the global energy transition will unfold, according to a report by the country’s central bank.

Australia is the world’s biggest exporter of coal and liquefied natural gas, with fossil fuels accounting for around a quarter of its total exports, worth AUS$71 billion (US$51.9 billion) in the last financial year according to government figures.

Around two-thirds of the country’s fossil fuel exports are shipped to three big customers, Japan, China and South Korea, all of which have set net zero emissions targets; Japan and South Korea by 2050 and China a decade later.

Under three scenarios, the volume of Australian coal exports falls, with the sharpest falls seen under Net Zero and Below 2°C scenarios, in which Australia’s coal exports fall by 80per cent by mid-century.

Under the fourth scenario, which incorporates only current government policies with limited progress in reducing emissions, coal exports increase gradually to be 17per cent higher in 2050.

Chinese coal imports from Australia drop 98.6% as restrictions bite

In the first seven months of the year Chinese coal imports from Australia have totalled just 780,000 tonnes as Chinese restrictions on Australian coal have started to hurt, according to Oceanbolt. This represents a 98.6% drop compared with 56.8 million tonnes in the same period in 2020.

In the first seven months of 2020, 697 voyages were made carrying coal between Australia and China. Out of these, 59.1% were on Panamax ships while Capesize ships proved the second most popular, account-

ing for 35.3%. So far this year, only 14 journeys have been carried out, of which eight were on Panamax ships.

On the other hand, imports of coal from Indonesia have grown 45.2%, from 76.4 million tonnes in the first seven months of last year to 110.9m tonnes in 2021, resulting in the share of total Chinese coal imports from Indonesia jumping to 60.4%. The share from Australia on the other hand has fallen to just 0.4% in the first seven months of 2021.

Despite the steep drop in exports to China, total Australian coal exports are up by just under 400,000 tonnes compared with the first seven months of last year, representing a growth rate of 0.2%. Exports to India and South Korea have grown the most, up by 22.3 million tonnes (+96.3%) and 15.0 million tonnes (+72.2%) respectively.

Coal to continue help powering Australian economy

Minister for Resources and Water Keith Pitt says Australian coal will not be staying in the ground while it continues to provide thousands of jobs and bring significant economic benefits both here and across the world.

Minister Pitt said coal remains Australia’s second largest export and that won’t be changing any time soon despite suggestions otherwise from Londonbased academics.

“Australia accounts for approximately 8 per cent of the world’s thermal and metallurgical coal production, which is exported to over 25 countries including the UK, Germany and New Zealand.

“Our coal is providing the power and steel-making capability to developed and developing nations throughout Asia, creating economic and social opportunities for millions of people,” Minister Pitt said.

“That translates to around $50 billion in exports and the industry provides direct jobs for over 50,000 Australians and supports the jobs of another 300,000.

“Over $3 billion in royalties last financial year made a significant contribution to the New South Wales and Queensland Governments’ ability to pay for the health services, schools and other essential services Australians rely on.

Australian coal mine approved despite climate ruling

This is the first coal mine approval by the Australian minister for the environment Sussan Ley since the Federal Court of Australia ruled in May that she may breach her duty of care to protect Australian children if she failed to consider the effects of climate change when approving coal mines. She took into account China's capacity to buy coal elsewhere in the world after Beijing disrupted imports of Australian coal when deciding to approve Russell Vale.

The argument that Australian coal mines will simply be replaced by alternate sources if they are not approved, could lead to further approvals including Whitehaven Coal's 10mn t/yr Vickery mine, which was at the centre of the Federal Court ruling in May.

The Russell Vale approval allows Wollongong, which delisted from the Australian Securities Exchange a year ago, to extract 3.7mn t over five years after a previous plan to extract 4.7mn t was rejected. The firm has been under financial pressure for several years and was forced to close the Wongawilli coking coal mine in NSW in April 2019 following safety breaches.

Jindal Steel, which took control of Wollongong from Indian firm Gujarat NRE Coke in 2013, has issued a cash advance of A$550mn ($408mn) to its Australian affiliate. Wollongong had drawn down A$486.8mn as of 30 June 2020.

Indonesia sets Sep thermal coal HBA at record high $150.03/mt on strong China demand

Indonesia's Ministry of Energy and Mineral Resources set its September thermal coal reference price -- also known as Harga Batubara Acuan, or HBA -- at $150.03/mt, the highest since the government started tracking prices in January 2009, helped by strong China demand, a ministry spokesperson said Sept. 8.

"This is quite a phenomenal number in the last decade. China's high demand exceeds its domestic production capacity," ministry spokesperson Agung Pribadi told S&P Global Platts.

The HBA was also influenced by increasing demand from South Korea and Europe, along with high natural gas prices, Pribadi said.

The HBA is a monthly average price based 25% each on Platts Kalimantan 5,900 kcal/kg GAR assessments, Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR), Newcastle Export Index (6,322 kcal/kg GAR),

and globalCOAL Newcastle (6,000 kcal/kg NAR). In August, the daily FOB Kalimantan 5,900 kcal/kg GAR coal assessment averaged $126.276/mt, up from $106.476/mt in July, Platts data showed.

Indonesian rains shake up thermal coal market

Heavy rainfall in the past few days in parts of Indonesia's main Kalimantan coal-producing region has caused flooding at several mines, creating the potential for supply tightness and further price gains. The downpour could well be a precursor to the upcoming monsoon season in the south-east Asian nation that could keep availability tight.

A number of coal producers are seeking changes to loading schedules for shipments, while others have declared force majeure on shipments. A rough estimate suggests the current situation will disrupt 4mn5mn t/month, mainly from South Kalimantan, an Indonesia-based trader said. The country, which is the biggest thermal coal exporter in the world, shipped 36.7mn t of coal in June, according to customs data.

A state of emergency has been declared in South Kalimantan's Tanah Bumbu regency until 17 September because of heavy rains and flooding. The rains have also disrupted coal logistics in other parts of Kalimantan. The diversion of cargoes to the domestic Indonesian market after authorities enforced producers' supply obligations is adding to the squeeze.

The support to current market fundamentals also stems from China's ban on Australian coal imports, which has distorted thermal coal trade flows and created unprecedented price imbalances in the market. And the latest supply tightness, particularly for the popular low-calorific-value (low-CV) GAR 4,200 kcal/kg, is propelling interest in ultra-low-CV and some off-spec mid-CV cargoes, according to another Indonesian trader.

.US coal demand is rising, but supplies remain tight

Coal demand and prices are booming as natural gas prices soar, but U.S. mining companies have not ramped up production to meet the new market conditions.

Since climbing from a sharp drop in the early weeks of the COVID-19 pandemic, the overall U.S. coal supply response has been conservative. There are numerous reasons mines in the long-struggling sector have not ramped up production, including limited access to capital, uncertain demand outlook, labor shortages and the time it takes to increase supply.

The U.S. Energy Information Administration recently said it expects coal demand from the U.S. electric power sector to increase by 100 million tons in 2021 and export demand to rise by 21 million tons compared to 2020. However, the agency also warned that constraints in capacity and transportation will limit the ability of producers to meet that demand.

Analysts said the market would most likely be corrected by a drop in demand brought on by lower gas prices, not more coal supplies.

Recognizing that lower summer demand slowed gas-to-coal switching that may have otherwise occurred, Piper said if fuel economics remain supportive, it could lead to increased coal shipments.

US coal exports plummet 42.2% on week of Hurricane Ida: cFlow

Weekly US coal ship departures plummeted in recent weeks due to Hurricane Ida and its aftermath.

Twenty-nine coal ships carrying nearly 1.48 million dwt of coal departed the US, down 42.2% from 2.55 million dwt on 41 ships the previous week.

With shipments delayed by Hurricane Ida, coal ship departures from the Gulf Coast dropped 64.7% week on week. Gulf Coast coal ship departures fell to a 10-week low of six carriers. At 119,041 dwt of coal, Turkey was the top destination for US coal shipped from the Gulf Coast. Brazil followed with 63,474 dwt of Gulf Coast-shipped coal destined for its shores. Rounding out the top three was Guatemala, set to receive 37,685 dwt of coal from the US Gulf Coast.

Similarly affected by severe weather, Atlantic Coast coal shipments decreased 30% week on week to 14 ships. Destined to receive 274,385 dwt of US coal, Gibraltar was the top destination for coal shipped from the Atlantic Coast. The United Kingdom followed, set to receive 114,890 dwt of US coal. The country importing the third-largest amount of US Atlantic Coast coal was Sweden, scheduled to receive 84,000 dwt.

Russia’s Coal Exports Up 9.8% Year-on-Year To 107.3Mln Tonnes In H1

Russia’s coal exports increased by 9.8% year-onyear to 107.3 million tonnes in the first half of 2021,

“Consumption of Russian coal in the world is growing. In the first half of 2021, the total exports of Russian coal amounted to 107.3 million tonnes, which is 9.8% more than in the same period last year,” the statement says.

In particular, exports to Europe during this period increased by 2.4%, to 22.5 million tonnes, and shipments to China grew by half, to 24.15 million tonnes.

Special presidential envoy Anatoly Chubays told the Eastern Economic Forum that the strategy for the development of the Russian coal industry, which was adopted last year, could not be implemented in a situation of falling coal consumption in China.

Germany: Coal tops wind as primary electricity source

Despite efforts to boost renewable energy sources, coal unseated wind power as the biggest energy contributor to the German network in the first six months of 2021, according to official statistics.

The data comes as Germany looks to speed up its exit from coal-powered plants after years of mounting pressure from climate experts and activists over the country's dependence on coal and its detrimental impact in fueling the climate crisis.

But the latest figures also reveal the challenges that lie ahead with the country's energy shift. Data published by the Federal Statistics Office (Destatis) found that the production of electricity from "conventional" energy sources rose by 20.9% this year, compared to the first half of 2020.

In total, conventional energy sources — including coal, natural gas and nuclear energy comprised 56% of the total electricity fed into Germany's grid in the first half of 2021. Coal was the leader out of the conventional energy sources, comprising over 27% of Germany's electricity.

Wind power's contribution to the electric grid, on the other hand, dropped significantly compared to the previous year — from 29% to 22%.

UK fires up coal power plant as gas prices soar

Warm, still autumn weather has meant wind farms have not generated as much power as normal, while soaring prices have made it too costly to rely on gas.

As a result, National Grid ESO - which is responsible for balancing the UK's electricity supply - confirmed coal was providing 3% of national power.

It said it asked EDF to fire up West Burton A, which had been on standby. A National Grid ESO spokesman said there had been a three-day coal-free run in mid-August.

However, the country had relied on some coal power every day since then.

Last year, coal contributed 1.6% of the country's electricity mix. That was down from 25% five years ago. Both the government and National Grid ESO have committed to phasing out coal power completely by 2024 to cut carbon emissions. However, coal is currently still used when it is better value than gas.

Cal generation in NZ already outstripping previous years

New Zealand used more than one million tonnes of coal in just the first half of this year, more than any full year since 2012, as low hydrolake levels and gas shortages continued through the quarter.

Between April and June, the burning of coal accounted for 12 percent of the country's electricity, according to figures released this week by the Ministry of Business, Innovation and Employment.

More electricity was generated from coal in the June quarter than any since June 2008.

Coal imports were the highest on record, with 632,000 tonnes coming into the country in three months.

Renewable energy generation in the June quarter fell to the lowest level since 2013, at 75 percent. This is six percentage points lower than the June quarter last year, and was as high as 85.7 percent in December 2019.