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VDKi publishes its initial assessment of the global trade, consumption and import of coal in 2015

As the German Coal Importer Association (VDKi) in Hamburg suggested last summer, the steady growth reported in the production of coal (coking and steam coal) for more than a decade is now expected not just to have stagnated but to have declined for the very first time. The VDKi estimates that global production has decreased by approximately 150 to 200 mt to 7 bn t and seaborne coal trade has also fallen by 50 mt to 1.12 bn t. The particulars of the VDKi assessment are as follows:

  • Production has dropped by 110 mt in China and by 70 mt in the USA.
  • Australia and India were able to maintain or substantially increase steam coal production.
  • For a number of reasons, Indonesia was no longer able to increase its production of steam coal as in recent years, and instead cut down production of coal and lignite by 11 % to 408 mt.

Seaborne coal trade and any changes in it are primarily determined by China and India. China is mainly responsible for the decline, having reduced coal imports by more than 30 %, or 73 mt, to support its own coal mining industry. However, thanks to the 6 % import duty on steam coal being cut due to the trade agreement with China effective February 2016, the export situation could improve for Australia at least.

There have also been clear shifts amongst exporting countries:

  • Compared with the previous year, Australia and South Africa were able to maintain their export levels in 2015, exporting 386 mt and 76 mt respectively. Russia was able to increase exports by 7 mt, or 5 %, to 150 mt, and Colombia increased exports by 2.5 mt up to 79 mt. This was aided by the depreciation of the Russian rouble and the Colombian peso.
  • By contrast, provisional figures provided by the VDKi show that Indonesia reduced exports by 32 mt, down to 325 mt, and that the USA likewise reduced exports by 20 %, or 17 mt, down to approximately 65 mt.

Apart from a brief interruption, the price of coal on the global market is now in its fifth year of decline. It reached its highest point in 2015 in February, at slightly more than 63 US$/t cif ARA for steam coal, and temporarily dropped to its lowest point in December at just under 50 US$. In mid-December 2014, steam coal still cost approximately 30 % more than it does today, at 72 US$/t. The price of shipments in February and March 2016 is already below 50 US$.

The EU has predominantly recorded a decline in coal imports compared with 2014. Imports to the United Kingdom in particular have fallen sharply (37 %). In 2015, Italy and Germany imported roughly the same overall amount of coal as the previous year. Spain increased its imports by 2 mt to 18 mt. An increase in the amount of power generated using renewable energies in the EU countries, combined with altogether unsustainable economic growth, is expected to limit steam coal imports in 2016.

The fact that the clean dark spread (costs for coal, freight and CO2 certificates) remained cheaper than the clean spark spread (costs for gas, transportation and CO2 certificates) in 2015 was deemed positive by the VDKi, despite considerable pressure on gas volumes and prices. This bolstered the position of coal-fired power generation behind the leading sources of renewable energy in the “race to cover the load” and further suppressed gas-fired power generation in Europe. Power was frequently exported to countries that rely heavily on gas-fired power generation, such as the United Kingdom or the Netherlands. Moreover, as a result of the wet summer in 2015, power was exported to countries with insufficient power plant capacity on the grid, such as France and Austria.

Although the use of coal in Germany fell only by a total of 0.7 % to 57.7 mt SKE in 2015, the use of coal in the steel industry remained unchanged at 17.8 mt. The use of coal to generate power fell by a moderate 0.8 % to 38.0 mt SKE and by a minimal 0.1 mt SKE to generate heat. Roughly two thirds of the total amount of coal consumed in Germany is used to generate electricity.

In view of the “climate-related political mood”, the amount of coal imported by Germany in 2015 was significant: According to provisional calculations by the VDKi, it has fallen by just 4 % to roughly 54 mt. 89 % of the overall consumption of coal in Germany, which stands at 57.7 mt SKE (provisional figure), was covered by imports, and 11 % was covered by domestic coal. (VDKi/Si.)