Coal demand projected to jump by 70%
Coal demand projected to jump by 70%
SYDNEY (Reuter): Demand for internationally traded steaming coal is forecast to jump by 70 percent to 395 million tons between 1995 and year 2005, a major study of the world coal trade by Australian Mineral Economics Pty Ltd (AME) said.
Australia, the major beneficiary, will expand production and shipments by more than any other producing nation, according to the AME study, "Export Coal 1995/1996 -- the Second Boom."
Total internationally traded steaming coal is forecast to rise to 337 million tons in year 2000 and to 395 million tons by 2005 from 231 million tons in 1995.
Australian coal shipments of all types are forecast to rise by 77 million tons to 212 million tons in 2005 from 135.5 million tons in 1994.
"There will also be massive expansion from countries such as Colombia, Venezuela and Indonesia," the report said.
However, the study raises questions about the financial viability of new coal developments.
"The international coal trade has not been profitable for many players for a long time. It is difficult to understand how the required capacity will be developed," the AME study said.
AME bases its steaming coal demand forecasts primarily on Southeast Asian power needs created by strong economic growth.
International coking coal demand is forecast to increase slowly, by 17 million tons a year between 1994 and year 2000.
Total demand for traded coking coal is forecast to reach 178 million tons by year 2000 and 180 million tons by year 2005, up from 162 million tons in 1994.
Forecast steel industry coal demand after year 2000 is "very flat", increasing by two million tons a year for coking coal and by one million tons a year for non-coking coal.
Increased blast furnace steel production is expected from South Korea, India, Taiwan and possibly from greenfields plant in Indonesia, but not from Japan, the report said.
Japan
Japanese demand for coking coal is forecast to contract to 54.3 million tons in 2005 from 58.56 million tons in 1994, while imports of steelmaking non-coking coal are expected to rise to 10.44 million tons from 6.94 million tons in 1994.
The report points to big increases in imported coking coal by South Korea, Taiwan and India.
South Korean imports are forecast to rise to 23.05 million tons in 2005 from 13.81 million tons in 1994.
Over the same period, Taiwan's imports are forecast to rise to 14.05 million tons from 3.88 million tons and India's to 14.18 million tons from 8.91 million tons.
Japanese import demand for steaming coal is forecast to rise to 95.7 million tons by 2005 from 52.6 million tons in 1994.
Over the same period, Taiwan's imports are forecast to rise to 34.6 million tons from 22.5 million tons; South Korea's to 54.3 million tons from 21.6 million tons; and Southeast Asia's to 37.1 million tons from 13.0 million tons.
The report said nominal prices of imported coking coal will rise to US$73.16 a ton in year 2005 from $51.10 in 1995, after reaching $53.90 in 1996.
Nominal steaming coal prices will rise to $60.50 a ton in 2005 from $40.85 in 1995, after reaching $43.07 in 1996.
AME said the 1996 coal pricing negotiations between Australia and Japan would be undertaken in an atmosphere of mutual mistrust.
"Following the higher than expected price rise in early 1995, the Japanese have been seeking any way possible to diminish their reliance on Australia for supply," AME said.
"Despite their desire for no price rise, the Japanese steel mills will accept one to support the benchmark system and their role as price setter," AME said.
It forecast a 1996 coking coal price rise of about US$2.50.