Asian woes cut world thermal coal demand

Asian woes cut world thermal coal demand

SYDNEY (Reuters): Economic disruption in Asia was a major factor behind a big cut in forecast world demand for thermal coal in calendar 1997, a coal conference here was told yesterday.

Convenor of the 1998 Global Coal Market conference, Gerard McCloskey, said McCloskey Coal Information Services Ltd's forecast increase in world 1997 thermal coal demand had been halved to 8.2 million tons from the forecast of 16.7 million tons for the same year made a year ago.

The forecast 8.2 million tons increase was on the 262.1 million ton demand of 1996.

Europe's 1997 demand had been revised down by three million tons while Asia's forecast demand growth had been cut by five million tons to 8.7 million.

Total Asian demand in 1996 was 132.7 million tons.

The forecast demand cuts were based on lower than scheduled coal demand from new Japanese power stations which came on stream in 1996 and 1997.

Taiwan's state-owned Taiwan Power Co was also turning increasingly to independent power projects, he said.

The big change on the supply side had been a cut in forecast U.S. availability for 1997, changing an earlier forecast of a four million ton increase on 1996 supply of 29.9 million tons to a decrease of five million tons, he said.

Australia's 1997 supply was forecast to increase by eight million tons from the 61.8 million tons in 1996, he said.

Indonesian supply was forecast to increase by 4.3 million tons from the 31.3 million tons of 1996 while Colombian supply was forecast to rise by 4.0 million tons from 18.4 million tons.

World demand in 1998 was forecast to rise by 19.6 million tons, mainly in the Asia/Pacific, while total supply was forecast to rise by 15.35 million tons.

Indonesia

Indonesia was seen as contributing the biggest increase in supply, of 5.8 million tons, while Australia was seen increasing supply by 4.0 million tons.

South Africa supply was seen rising by 2.25 million tons and U.S. supply by 1.5 million tons.

Rescue for the world coal market would not occur with a sudden rebound of prices, McCloskey told the conference. Uncertainty in Asia would temper demand growth in 1998, with Japan's economy "lame" and elsewhere in Asia tigers turning into kittens, he said.

McCloskey's list of negative influences of the coal market included falling prices, high costs, Chinese sales on the spot market, rising Indonesian exports, declining production by the Japanese steel mills which could push more semi-soft coking coal onto the steaming coal market, an overall decline in European demand, growth in the Asian spot market, and expanding South American production.

These were tempered by the U.S. retreat from the export market, doubts about South American coal investments, stronger economic performances by some European countries, emerging demand from India and the determination of some major players to get their production arrangements "right".