Global thermal coal demand will outpace supply in 2018

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Thermal coal demand will outpace supply in 2018, leading to a strong market driven by rising demand from top buyers India and China, the chief coal analyst at Noble Resources said on Tuesday.

Coal demand this year will increase by 48 million tonnes, or 5 percent higher than 2017, to 974 million tonnes, said Rodrigo Echeverri, the head of hard commodities research at Noble, at the Coaltrans India conference in Goa. However, supply this year will only expand by 38 million tonnes.

“2018 will be another strong year for the coal market,” Echeverri said in his presentation at the Coaltrans India conference in Goa. Higher price will cause “some response on the supply side but nowhere near enough to eclipse the demand-driven rally.”

Coal demand in major coal consuming countries rose and prices gained in 2017, after a downturn spanning over half a decade put many small thermal coal producers out of business.

India, which is the world’s second-biggest coal importer after China, is expected to see growth in imports in 2018 after falling for two straight years, Echeverri said.

According to Echeverri, India’s dependence on Indonesian coal is expected to rise over the next three years.

“Indonesia coal constitutes 68 percent of India coal imports and this percentage is expected to grow to 78 percent by 2020.”

He expects overall Indonesian coal exports globally to slightly exceed 400 million tonnes by 2020.

Source: REUTERS