• 4 minutes U.S. Shale Output may Start Dropping Next Year
  • 8 minutes Read: OPEC WILL KILL US SHALE
  • 12 minutes Tidal Power Closer to Commercialisation
  • 16 minutes Washington Eyes Crackdown On OPEC
  • 3 hours Why U.S. Growers Are Betting The Farm On Soybeans Amid China Trade War
  • 9 hours Trump to Make Allies Pay More to Host US Bases
  • 43 mins US-backed coup in Venezuela not so smooth
  • 10 hours BATTLE ROYAL: Law of "Supply and Demand". vs. OPEC/Saudi Oil Cartel
  • 20 hours Solar to Become World's Largest Power Source by 2050
  • 1 day Sounds Familiar: Netanyahu Tells Arab Citizens They’re Not Real Israelis
  • 11 hours Biomass, Ethanol No Longer Green
  • 1 day THE DEATH OF FOSSIL FUEL MARKETS
  • 1 day this is why Climate Friendly Agendas Tread Water
  • 1 day Boeing Faces Safety Questions After Second 737 Crash In Five Months
  • 1 day Exxon Aims For $15-a-Barrel Costs In Giant Permian Operation
  • 9 hours Trump Tariffs On China Working
The Billionaires Battling It Out Over Biofuel

The Billionaires Battling It Out Over Biofuel

The biofuel credit debate is…

The Oil Majors Aiming To Save Alaska’s LNG Dreams

The Oil Majors Aiming To Save Alaska’s LNG Dreams

Just when regulators and energy…

Oil & Gas 360

Oil & Gas 360

From our headquarters in Denver, Colorado, Oil & Gas 360® writes in-depth daily coverage of the North American and global oil and gas industry for…

More Info

Coal Demand Is Shifting To Asia

Coal Field

As Europe and America consume less coal, China gains greater influence over coal industry

In its medium-term coal market report for 2016, IEA reports that global coal demand growth has stalled after more than a decade of 4 percent annual growth, with demand in 2016 to be below 2013 levels. Consumption decreased for the first time in 2015 as declines in the U.S. and China were not offset by growth elsewhere.

China saw coal use decline in all major consuming sectors; electricity, steel, and cement. Coal generation dropped due to sluggish 0.5 percent electricity demand growth and the country’s diversification policy, which led to growth in hydro, nuclear, wind, solar, and natural gas power generation growth.

Coal use in the U.S. plummeted due to low natural gas prices and coal plant retirements pushed by the Mercury Air Toxics Standards (MATS). Overall U.S. coal consumption dropped 15 percent, the largest annual decline ever.

Plenty of coal in Asia’s stocking



(Click to enlarge)

Even as coal declines in Europe and America, the shift to the East is accelerating. Coal is the preferred option to increase power generation in growing economics that face electricity shortages. Solid consumption and growth is expected for India, Vietnam, and Indonesia, although China will continue to be the largest coal consumer by far over the period.

Related: Libyan Supply Fears Dampen Oil Price Optimism

Coal production and trade has been traditionally believed to be less affected by geopolitical issues due to easy logistics and widely distributed reserves. As coal consumption shifts to Asia, however, IEA has raised the possibility that coal production, demand, trade, technology, and finance might disappear from Europe and America and become increasingly concentrated in Asia.

IEA believes this might make coal consumption more controversial, complicating negotiations on mitigation of C02 emissions.

Despite increasing restrictions from many European and North American banks and institutions on coal financing, the agency reports investments in coal power generation have been stable over the past few years.

China will move the coal world with 50 percent of global demand, 45 percent of production and 10 percent of seaborne trade

Although IEA sees a brief dip in Chinese electricity and coal demand over the next few years, the country will account for 50 percent of global coal demand, 45 percent of coal production, and 10 percent of seaborne trade over the next decade.

Related: The Craziest Oil Price Predictions For 2017

Measures taken by the government this year to curb oversupply caused coal prices to spike. Reacting quickly, the Chinese government softened the policy shortly after implementing it to ease volatility. Rapid production cuts and price increases produced a spike in imports to China.

In short, Chinese macroeconomic development and policies have a huge influence on coal supply and demand worldwide.

Mining capex is currently very low, very few projects are moving ahead, overcapacity remains in China, and current strong prices are more linked to Chinese policies to cut oversupply rather than sustained strong demand.

By Oil & Gas 360

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment
  • JHM on December 27 2016 said:
    Coal is in structural decline globally. IEA too easily clings to a BAU view of the market. Solar and wind are now half the cost of new coal, non-polluting, and take only a quarter of the time to bring online that it takes for coal. It's cheaper, cleaner and faster. So there is no basis to claim that coal is still "preferred." That's just nonsense. India had 50 GW of coal in construction. They have decided to bring those projects to completion as backup power. They expect to run brand new plants at below 50% capacity. That's not nearly enough to make these projects pencil out. So there will be no new plans for coal in India. China has already figured this out. This is not a "dip" in demand. This is structural decline, and the IEA is too blind to see it.

Leave a comment

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