Global coal supply and demand may undergo major adjustments in total amount, structure and region

Recently, the China Coal Economic Research Association released the outlook on the situation characteristics of the world coal market in the first half of the year and the change trend in the second half of the year (hereinafter referred to as the outlook) at the 2021 China Coal Economic Forum and coal circulation resources Expo, indicating that with the advancement of the global green and low-carbon development process, the global energy and coal supply and demand may be aggregate Major structural and regional adjustments.

In 2020, trade will shrink significantly, and the market focus will move eastward

In 2020, novel coronavirus pneumonia affected the world economy and the global coal market was also deeply affected.

The outlook points out that in 2020, the world coal supply and demand will decline, the international trade will shrink sharply, and the price will hit a record low.

Among the world's major economies, only China's economy recovered rapidly and stably after the epidemic eased in the second quarter of last year, driving the continuous recovery of energy consumption, and the annual coal consumption increased by 0.6% year-on-year. Affected by the epidemic, the economic vitality of India, the United States, the European Union and other economies decreased significantly, and the energy consumption showed a downward trend. The annual coal consumption decreased by 7%, 20% and 21% respectively year-on-year.

In terms of coal production, in 2020, among the 16 major coal producing countries in the world, only three countries increased their coal production, namely China, India and Vietnam. Their coal production was 3.9 billion tons, 740 million tons and 48.62 million tons respectively, with a year-on-year increase of 1.4%, 0.8% and 5.1% respectively. The coal output of the other 13 major coal producing countries has declined to varying degrees. For example, the United States produced 489 million tons of coal in 2020, a year-on-year decrease of 23.7%; Indonesia's coal output was 563 million tons, a year-on-year decrease of 8.3%; Russia's coal output was 401 million tons, a year-on-year decrease of 8.2%.

The spread of novel coronavirus pneumonia affects global industrial production, and the international coal trade is obviously restricted. The trade volume of the two major international coal markets in the Asia Pacific and Atlantic basin has shrunk to varying degrees. According to the statistics of the International Energy Agency, in 2020, the global coal trade volume decreased by 10% year-on-year, about 150 million tons, the largest decline in history.

According to the shipping data of Luft, a global financial market data analysis agency, the global seaborne coal trade volume decreased by 12.7% year-on-year in 2020.

At the same time, the international coal market price presents a deep "V" trend. In the first half of 2020, the global economic downturn affected the sharp decline of international coal prices. The world's three major thermal coal price indexes, the thermal coal prices of three ports in Europe, Richard bay port in South Africa, Newcastle port in Australia and Indonesia, which is regarded as the wind vane of export thermal coal prices in the international market, fell sharply, and even fell below the bottom of the last market cycle.

With the normalization of epidemic prevention and control and the initial promotion of vaccines, in the fourth quarter of last year, the indicators of major economies reached the bottom and stabilized. The passively reduced production capacity met with economic recovery and a wide range of extremely cold weather. The supply of coal in the global coal market was relatively insufficient, and the price rose rapidly, returning to the pre epidemic level. The price of thermal coal in Indonesia has risen rapidly for four consecutive months since August 2020. In January 2021, the price of thermal coal in Indonesia was USD 75.84/t, rising month on month for four consecutive months, the highest level since July 2019. The three major global thermal coal price indexes also rebounded rapidly in the fourth quarter of 2020, and have returned to the pre epidemic level by the end of the year.

Outlook believes that the eastward shift of the focus of the world coal market is more obvious.

20 years ago, the coal consumption of the United States and EU countries accounted for about one third of the total global coal consumption, which was basically equivalent to the total consumption of China and India. However, in the past 20 years, the development and change trend of world coal consumption has shifted from European and American countries to Asian countries.

In 2020, China and India accounted for two-thirds of the total global coal consumption. In the past 20 years, the proportion of coal consumption of the two countries in the total world coal consumption has increased by 27 percentage points and 5 percentage points respectively. At the same time, the proportion of total coal consumption in East Asian countries has also increased from 1% to 5%. Asia has become the center of global coal consumption and international trade.

With the continuous advancement of coal removal process in developed economies, the proportion of coal consumption in the United States and EU countries shrank from 23% and 12% to 6% and 4% respectively, gradually fading out of the main coal consumption market.

The regional change of world coal consumption also leads to the continuous change of international coal trade pattern. The shrinking demand for coal in Europe and the rising demand in Asia have prompted Russia to change the long-term coal export pattern of "emphasizing the West and neglecting the East". In 2020, Russia exported 107 million tons of coal through the eastern port, accounting for 55.4% of the total export. At the same time, Russia will also accelerate the construction of logistics facilities such as railways and ports, actively expand the coal market in the Asia Pacific region, and accelerate the transfer of coal exports to the East.

South Africa's coal exports are also gradually shifting to Asia. Before 2000, South Africa's coal exports to Europe and the United States accounted for more than 80% of the total coal exports, and less than 10% to South and East Asia. In 2009, the proportion of South Africa's coal exported to Europe has decreased to 47%, and the coal exported to East and South Asia has increased to 22%. In 2020, the coal export shipment volume of Richard bay port in South Africa was 70.2 million tons, the shipment volume exported to Asian countries accounted for 91%, and the shipment volume exported to Europe accounted for only 3%.

At the same time, joint response to global climate change has become the consensus of economic development of all countries. The outlook says that green recovery and low-carbon development after the epidemic is the general trend, and the global coal industry is facing severe challenges.

China puts forward the goal of carbon peak and carbon neutralization, and unswervingly follows the path of green, low-carbon and high-quality development.

The substitution of renewable energy for coal continues to increase. In 2020, renewable energy power generation in the United States exceeded coal-fired power generation for the first time, further reducing its coal power generation, and the annual coal consumption decreased by 20% year-on-year. In 2020, the EU's coal and lignite power generation decreased by 22% year-on-year. For the first time, the proportion of renewable energy power generation (39%) exceeded that of fossil energy (36%).

However, at the same time, the coal consumption of Japan and South Korea remains relatively stable; Coal consumption in Indonesia, India and other countries in Southeast Asia and South Asia is still on the rise. Kazakhstan, South Africa and other traditional coal consuming countries still account for a large proportion of coal consumption in their domestic primary energy.

The outlook points out that the external environment for the development of the global coal industry is becoming increasingly difficult. The world's major multinational mining companies have said to withdraw from the field of thermal coal production, and the world's major financial institutions have also said that they will no longer give financial support to coal industry chain projects, and the development of the global coal industry will face the challenge of insufficient capital investment.

In the first half of 2021, production and demand gradually recovered and trade volume continued to decline

Since the beginning of this year, with the continuous improvement of vaccination rate and the increase of policy support from major economies, the global economy has recovered rapidly, and the global coal market has also recovered and increased《 Outlook pointed out that in the first half of this year, the situation of the world coal market showed four characteristics.

First, coal demand has gradually returned to normal.

Since this year, the trade exports of China, the United States, major EU Member States and Japan have increased by 30% to 120% year-on-year. As of June 2021, the power consumption of the world's major economies has recovered to the pre epidemic level, driving the rapid rise of energy consumption. At the same time, the superposition of extreme weather and economic recovery in the main coal consumption market represented by Asia has accelerated, and the demand of the coal market has been released rapidly.

According to the data of the International Energy Agency, in the first quarter of 2021, the global coal consumption increased by 3.5% year-on-year. It is expected that with the lifting of epidemic prevention restrictions and economic recovery, the global energy demand will increase by 4.6% year-on-year in 2021. Driven by the power industry, the global coal demand is expected to rebound strongly and increase by 4.5% over 2020.

According to the analysis and prediction of China Coal Economic Research Association, with the recovery of global industrial chain and many uncertainties caused by temperature changes, the world coal consumption will continue to operate at a high level in the second and third quarters of this year.

Second, the coal output of major coal producing countries has gradually recovered.

Since this year, coal production in most countries has bottomed out and rebounded. According to the preliminary statistics released by the world's coal producing countries, from January to may 2021, the coal output of most of the 16 major coal producing countries in the world has gradually recovered, and the coal output has changed from decline to rise or narrowed.

From January to May this year, due to the increase in production of singareni coal mine company, India's coal output was 361 million tons, a year-on-year increase of 0.8%. Affected by extreme weather, Indonesia produced 237 million tons of coal, a year-on-year increase of 4%, but only completed 38% of its annual plan. US coal output was 241 million tons, a year-on-year increase of 6.9%. Russia produced 178 million tons of coal, a year-on-year increase of 9.4%. Mongolia's coal output was 17.183 million tons, a year-on-year increase of 61.9%. In other major coal producing countries, the coal output in the first five months was relatively stable or the decline narrowed.

Third, the global coal trade volume continued to decline.

From the perspective of international trade, the global coal trade has not fully recovered, but shows a moderate recovery. In the first five months of this year, the global seaborne coal trade volume was 480 million tons, a year-on-year decrease of 1.9%. Among them, the coal trade volume in the first quarter was 279.3 million tons, a year-on-year decrease of 8.4%; In April, the coal trade volume was 96.4 million tons, a year-on-year increase of 6.3%; In May, the coal trade volume was 100 million tons, a year-on-year increase of 12%.

It is understood that the contraction of global coal trade in the first half of the year was mainly affected by two major coal exporting countries, Indonesia and Australia. In the first half of the year, the super long rainy season in Indonesia caused some mining areas and ports to declare force majeure, and the output decreased significantly. At the same time, the Indonesian government requires its domestic coal enterprises to strictly implement the minimum domestic market sales obligation, which further shrinks the resources already tight for export.

In the first half of the year, Australia was also hit by continuous heavy rainfall, which triggered floods, greatly affected coal mining, and temporarily paralyzed the traffic to the port. Newcastle port, the main coal export port, announced that it suffered force majeure, and the coal export decreased significantly.

Meanwhile, the epidemic spread in South Africa and Colombia restricted coal production, and the export volume decreased by 14.8% and 46.1% respectively year-on-year.

The decline in coal exports from these countries has also diversified the global coal exporting countries. The coal exports of Russia, the United States and Mongolia have increased significantly. Since this year, the coal exports have increased by 18.1%, 8.1% and 40.7% respectively year-on-year.

The international coal demand side market is also divided. Since the beginning of this year, the coal imports of China, Japan and South Korea have decreased over the same period, but the coal imports of Western European countries, India, Turkey and Ukraine have increased from decline, while those of Vietnam and Thailand, which increased last year, have decreased.

Fourth, the world coal market prices rose rapidly.

In the first half of the year, the demand of the world coal market increased rapidly, resulting in tight supply, which promoted the continuous and rapid rise of the international coal market price, and the coal price in some countries reached a new high in recent 10 years.

Last September, the reference price of thermal coal in Indonesia fell to US $49.42/t, the lowest level since its establishment in 2011. After that, it rebounded rapidly. In June 2021, the reference price of Indonesian thermal coal was US $100.33/t, an increase of 89.37% year-on-year, reaching a new high of US $100 / T since October 2018.

At present, the three major thermal coal price indexes in the world have reached the highest level in recent years.

There is still room for world coal demand in the second half of 2021

Since the beginning of this year, the global economy has recovered and developed better than expected. International institutions generally raised their global economic growth expectations for 2021. The world economic outlook released by the International Monetary Fund (IMF) in April raised the global economic growth this year to 6%, 0.5 percentage points higher than the forecast in January.

At the same time, the outlook points out that there is still great instability and uncertainty in the international political and economic environment. The global epidemic may occur repeatedly, the momentum of world economic growth is insufficient, it will take some time for the industrial chain, supply chain and value chain to fully recover, and the accumulation of global financial risks will accelerate. The major economies continued their loose monetary policy and further increased fiscal stimulus. The United States has implemented a fiscal stimulus plan of US $1.9 trillion and is brewing an infrastructure investment plan of more than US $2 trillion. The European Union, Japan and the United Kingdom continued to expand financial policy support. Commodity prices such as energy and metals rebounded and inflation expectations tended to strengthen.

The impact of epidemic situation and extreme weather on the world coal market has not been completely eliminated. With the repair of international production and manufacturing supply chain and the arrival of high temperature in summer, there is still room for release of coal market demand. At the same time, the coal output of major coal producing and exporting countries may continue to maintain the growth trend. However, Indonesia, Russia, Mongolia and other countries, affected by policies, transportation capacity and epidemic situation, even if the output has increased, there are still some restrictions on the export supply capacity.

As the epidemic situation eases and production recovers, the tight supply and demand of world coal may ease to a certain extent in the second half of the year. However, with the rapid economic recovery of various countries, the demand of world coal market will still show restorative growth in the second half of the year, and the coal supply may still be in a difficult and completely relaxed environment. Therefore, the outlook believes that it is also necessary to pay close attention to the uncertainty of national policies in the cross cycle supply-demand balance, as well as the risk of phased imbalance between coal supply and demand caused by extreme weather, repeated epidemic and other factors.

The International Energy Agency predicts that in 2021, driven by factors such as increased economic activity and rapid economic growth in major emerging economies such as China, the world coal demand is expected to rebound strongly, with a year-on-year increase of 4.5%.

In terms of coal production, global data analysis company predicts that global coal production will also resume growth in 2021, with a total volume of 8 billion tons, an increase of 3.5% over 2020.

At the same time, the scale of global coal international import and export trade will also change from contraction to expansion, and will increase by a large margin. Recently, according to the international shipping and port data, the Italian Coal Association predicts that the global seaborne coal trade volume will increase from 1.157 billion tons in 2020 to 1.21 billion tons in 2021, with a year-on-year increase of 5%.

The article is taken from the international energy information network

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