• 4 minutes US-backed coup in Venezuela not so smooth
  • 7 minutes Why Trump will win the wall fight
  • 11 minutes Oil imports by countries
  • 13 minutes Maduro Asks OPEC For Help Against U.S. Sanctions
  • 18 hours Climate Change: A Summer of Storms and Smog Is Coming
  • 17 hours Tension On The Edge: Pakistan Urges U.N. To Intervene Over Kashmir Tension With India
  • 18 hours The Quick Read On MBS's Tour of Pakistan, India And China
  • 17 hours Teens For Climate: Swedish Student Leader Wins EU Pledge To Spend Billions On Climate
  • 18 hours BMW to add 2,000 more jobs at Dingolfing plant
  • 19 hours Iran Starts Gulf War Games, To Test Submarine-Launched Missiles
  • 19 hours Venezuela: Nicolas Maduro closes border with Brazil
  • 2 days Amazon’s Exit Could Scare Off Tech Companies From New York
  • 1 day Itt looks like natural gas may be at its lowest price ever.
  • 20 hours Saudi A to Splash $100 Bln on India
  • 13 hours Washington Eyes Crackdown On OPEC
  • 15 hours Indian Oil Signs First Annual Deal For U.S. OilIndian Oil Signs First Annual Deal For U.S. Oil
  • 1 day NEW FERUKA REFINERY
Alt Text

Thermal Coal Prices Are Soaring

With tight supply in key…

Alt Text

Trump’s Bizarre Bid To Bailout Coal And Nuclear

The Trump administration is doing…

Alt Text

India’s Coal Reliance Deepens

Despite significant efforts to boost…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Trending Discussions

Goldman Sachs: “Peak Coal” Is Here

“Peak coal” is here.

Goldman Sachs released a September 22 research note that predicted that coal will decline and never come back. “Peak coal is coming sooner than expected,” the investment bank concluded. “The industry does not require new investment given the ability of existing assets to satisfy flat demand, so prices will remain under pressure as the deflationary cycle continues.”

The conclusion is a stunning one, especially considering the years of predictions that coal would climb inexorably as developing countries expanded their grids and their economies grew quickly. Last December, for example, the IEA predicted that coal consumption would grow steadily in the years ahead, expanding by about 2.1 percent per year for the rest of the decade. China would account for three-fifths of the growth in demand. “We have heard many pledges and policies aimed at mitigating climate change, but over the next five years they will mostly fail to arrest the growth in coal demand,” the IEA’s executive director said in December 2014. Related: Colorado Court Will Decide Fate Of Local Fracking Bans

But a lot has happened since then. Most important is the growing realization that China’s coal demand may not continue, a remarkable development, and perhaps a fatal one for many coal producers. The slowing demand for coal, along with the general commodity bust around the world, spells bad news for the coal industry. Goldman Sachs takes a dim view of coal prices for the foreseeable future. “We also reset our long-term forecast to $50/[tonne], down 23 percent from $65/[tonne], to reflect what we see as the remote likelihood that the market will tighten ever again,” the bank wrote. Related: There Are 800 Fossil Fuel Subsidies Around The World

In fact, it’s not just that demand growth will decline. Absolute demand will fall. Goldman Sachs predicts that global consumption of thermal coal used for electricity will dip from 6.15 billion tonnes in 2013 to just 5.98 billion tonnes in 2019. The decline is not enormous, but given the fact that not too long ago coal producers around the world expected strong growth for the next few decades, the downturn in coal demand is monumental.

Several coal producers in the U.S. have already gone bankrupt, including Alpha Natural Resources and Patriot Coal. Just this week, Arch Coal faced questions over a potential bankruptcy. Peabody, another major coal producer, is hoping to restructure some debt according to Bloomberg.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News