As demand from China and India continues unabated global thermal coal trade patterns are undergoing radical, although rather unsurprising, changes.
The first major shift will culminate during 2011 as China overtakes Japan as the world’s largest thermal coal importer while the second shift is set to occur in 2019 when demand for imported thermal coal from India will supplant China at 182 million tonnes, compared to China’s 178 million tonnes.
Wood Mackenzie’s coal chairman Jeff Watkins outlined the shifts in coal trends during a presentation at Coaltrans World in Amsterdam last week.
He said: “The global coal trade will grow significantly in the next few decades, with total thermal seaborne coal demand set to increase from 680 million tonnes to 1.187 billion tonnes between 2010 and 2025.
“However this is a growth story concentrated in the Pacific basic, driven by continued economic development in some of the world's largest economies. In fact, nearly all major coal-consuming countries in Asia are expected to experience significant demand growth with the notable exception being Japan.
“It has been well documented that China and India's economies have been relatively unscathed by the economic turmoil that developed economies have faced.
“China's GDP has surpassed Japan's making it the world's second largest economy after the US and we predict that this will be reflected in the country's coal demand. We forecast that in 2011, total thermal coal imports for China will reach 122 million tonnes, compared to a forecast of 120 million tonnes the same year in Japan.”
India’s appetite for power generation versus insufficient domestic supply will drive its need for coal imports. Wood Mackenzie expects India’s thermal coal demand to increase by 810 million tonnes, or 137%, by 2025 driven by a 158% increase in coal-fired power capacity.
Contradicting historic supply flows, Jeff Watkins says it's not just Indonesia that stands to reap the benefit of this changing demand. “While Indonesia will continue to be a key supplier of thermal coal to India, South Africa is best placed to provide additional supply, particularly given continued weak demand in its traditional export market in Europe.”
He also warns that Asia Pacific basin suppliers, including Australia and Indonesia, will require significant investment in order to continue increasing exports, and he wonders whether infrastructure expansions in Australia and South Africa will keep pace with increasing demand.

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