IEA: Coal Boom Unabated, Europe's Binge Temporary
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© OECD/IEA 2012 Medium-term Coal Market Report 2012 Keisuke Sadamori. Director, Energy Markets and Security. Paris, 18 December 2012
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The Medium-term Coal Market Report from the International Energy Agency makes for sobering -- if not surprising -- reading for anyone concerned about greenhouse-driven climate change. Presentation made in Paris, Dec. 18, 2012, by Keisuke Sadamori. Director, Energy Markets and Security. More on coal at Dot Earth: http://bit.ly/dotCoal More from IEA: http://www.iea.org/newsroomandevents/pressreleases/2012/december/name,34441,en.html
Transcript of IEA: Coal Boom Unabated, Europe's Binge Temporary
© OECD/IEA 2012
Medium-term Coal Market Report 2012
Keisuke Sadamori. Director, Energy Markets and Security.
Paris, 18 December 2012
© OECD/IEA 2012
Business as usual
Coal demand keep growing And so, too, coal trade
Global primary energy supply from fossil fuels
© OECD/IEA 2012
China is coal. Coal is China
* The increase in US oil demand in 2012 is caused by differing definitions. While historic data for US oil demand are based on IEA’s Oil Information, projections of US demand refer to US50 oil demand as defined in Table 2 of IEA’s Medium-Term Oil Market Report 2012.
Fossil fuel demand in major consuming regions
© OECD/IEA 2012
Power generation in non-OECD is crucial
0%
5%
10%
15%
20%
25%
30%
35%
0
100
200
300
400
500
600
700TWh
2009 2010 Relative growth 2009/10
Absolute growth
2009/10
Total coal-based electricity productionin 2009 and 2010
© OECD/IEA 2012
US shale gas switches on coal in Europe
Higher transportation costs for gas hinders regional integration
In Europe, coal reacts stronger than
gas to US low prices
0
0,5
1
1,5
2
2,5
3
3,5
0
1
2
3
4
5
6USD/GJ Mt
US steam coal exports to Europe (right axis) Northwest Europe (ARA CIF)
Henry Hub price Coal price in Central Appalachia
© OECD/IEA 2012
A golden age of coal in Europe?
Low carbon prices: the Eurozone crisis is a surprise, but the renewable ramp up is not
Gas to coal switch is already limited by system operation constrains
The need for conventional generation is declining
Decomissioning of old plants is sure, but economics of new coal to build is questionable
© OECD/IEA 2012
Moving East
Seaborneimports to
the Atlantic Basin
(218 Mt)
Seaborneimports to the Pacific
Basin(573 Mt)
Seaborneexports from the Atlantic
Basin(128 Mt)
Seaborneexports from
the Pacific Basin
(498 Mt)
Seaborne exports from South Africa
(71 Mt)
109 Mt 19 Mt
478 Mt20 Mt
Seaborne exports from
Russia(93 Mt)
59 Mt
42 Mt
34 Mt
29 Mt
Atlantic Basin Suppliers to both markets Pacific Basin
© OECD/IEA 2012
Coal prices are back in sync
0
50
100
150
200
250
300
350USD/t
Newcastle steam coal (FOB) Ultra-low volatile PCI coal (FOB)Australian prime hard coking coal (FOB)
© OECD/IEA 2012
Indonesia-China, a good partnership
2010(133 Mt)
2009 (104 Mt)
Australia Canada United States Other OECD Colombia
Indonesia South Africa Russia Vietnam Other
Indonesia meets much of Chinese demand For Chinese utilities, Indonesian coal is a good option For low cost Indonesian producers, Chinese coal thirst was good business
Steam coal imports to China
Seaborne steam coal trade
© OECD/IEA 2012
From Beijing to India?
Country Number of investments
Acquired resources/reserves (Mt)
Capital expenditure
(USD Million) Australia 9 17 138 7 612 Indonesia 28 6 271 4 526 South Africa 4 377 3 300 United States 3 348 820 Total 44 24 134 16 258
Selected investments of Indian companies in coal assets
© OECD/IEA 2012
Chinese slow-down can affect seaborne coal trade
-40
-20
0
20
40
60
80
100
2017
Mtce
Australia Russia United States Other exporters China Other importers
Higher in the B
CS
Low
er in the BC
S
Exporters Importers Exporters Importers
Thermal coal Metallurgical coal
© OECD/IEA 2012
Two steps forward
Outlook for global export capacity utilisation for seaborne hard coal until 2017
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
2010 2011 2013 2015 2017
Mtpa
Existing export capacity Probable expansions Potential expansionsPort capacity Exports historic Exports - BCSExports - CSDC
© OECD/IEA 2012
Is slow-down already happening?
BREAKING NEWS
© OECD/IEA 2012
KEY MESSAGES
Coal demand rises over the outlook period, approaching oil
Driven mainly by power generation in non OECD countries
Shale gas revolution led to decline in coal consumption in the US, and to increased use of coal in Europe
The large gas-to-coal switch in Europe is projected to peak in 2013
Whereas China will surpass the rest of the world in coal consumption, India will gain importance in coal market, becoming the largest seaborne coal importer
Seaborne coal trade will continue to increase unless there is a slowdown in Chinese economy
Announcements of cuts and layoffs, despite many projects in the pipeline
© OECD/IEA 2012
Thank you for your attention
