Coal, supplier of 30percent of the worlds’ energy, which had seen a year-on-year increase in the production for more than a decade and had the experts predict a more than double growth by 2030; witnessed a sudden fall in demand in 2019 as the lockdown duringtheCovid-19 brought many industrial activities around the globe to a halt.
However, its production and demand; both, are projected to bounce back in 2021 according to the International Energy Agency which has pegged these figures at 12 and 2.6 percent, respectively. These estimates are still below 2019 levels. The rise in demand is predicted to soon reach its peak by 2025, at around 7.4 billion tonnes.
To quote Keisuke Sadamori, Director of Energy Markets and Security- IEA, “The Covid-19 crisis has completely reshaped the global coal markets. Before the pandemic, we expected a small rebound in coal demand in 2020, but we have since witnessed the largest drop in coal consumption since the Second World War”.
The current stability is largely attributed to its sustained demand from Asian economies. The key players in the demand and supply have also switched places to favor the South and Southeast Asian countries.
In 2019, India’s import of coal was double that of EU. The Atlantic Basin which was the trade route for EU was, thus, pipped by the Pacific Basin, where Japan and Korea dominate. Australia, which has been the chief coal supplier to Japan, was three months ago banned by China for trade in coal and other commodities. The reason remains unknown. China makes up for half of the total global demand for coal. Thus, its trade deals are expected to impact the world market for those goods.
In January several of its cities faced a black-out due to coal shortage. However, analysts attributed this to the rising price of the commodity. This loss of Australia proved to be Indonesia’s gain. The country then increased its supply to China. It also plans to increase its market share in Vietnam, Pakistan and Bangladesh. Vietnam has the second largest power plant capacity in Asia. Meanwhile, the Indonesian Coal Mining Association (APBI) has carried over its production targets from last year, unchanged, hopeful that the majority of the world would have access to Covid-19 vaccines by June 2021.
This year South Korea announced its ninth basic plan for electricity which aims to reduce coal-fired power generation by 23percentin 2030 in preference for renewable energy. India’s state-owned Coal India Ltd (CIL) also recently auctioned off its 38 mines in an effort to diversify and shift to sustainable energy in 2021. Adani Enterprises, Vedanta, Hindalco Industries and Jindal Power were among some of its buyers.
World over there are only ten countries that account for 90 percent of the total coal production. From the largest to the smallest, the list includes China, the United States of America, India, Australia, Indonesia, Russia, South Africa, Kazakhstan, Columbia, and Ukraine. Two-thirds of the demand is for thermal coal, while the rest is for metallurgical coal. These are mainly used in power generation and steelmaking.
RNR Trade Corporation Company Limited (RNR)- a non-banking and non-financial company, has been studying the global trends in coal for the 20 years and has been the leader in offering consultancy and brokering services across South and Southeast Asia with a growing client base worldwide. To learn more, click here.