Australia cuts its global coal growth forecast by 90pc

  • : Coal
  • 21/06/28

Global trade in thermal coal is to grow by just 7mn t between 2020 and 2023, rather than the 65mn t previously forecast, according to the latest forecast by the Australian government's commodity forecaster.

The Australian Office of the Chief Economist's (OCE) latest Resources and Energy Quarterly (REQ) expects global trade in thermal coal to increase to 1.032bn t in 2023 from 1.025bn t in 2020 it said in its June REQ released today. It previously forecast that it would increase to 1.101bn t in 2023 from 1.036bn t in 2020 in its March REQ.

The downgrade is largely because of a slower than previously expected increase in coal imports into India and faster falls into Japan and South Korea. These countries have supported Australian exports during Beijing's unofficial ban on Australian imports into China since October, with the weaker buying activity to drag on Australian exports over the next 2½ years.

The OCE revised up its forecast for Chinese imports of thermal coal and for Indonesian exports, although it cut its projections for Australian, Russian and Colombian exports.

It has also revised up its Australian thermal coal price forecast for 2021 and 2022 but revised it down for 2023. The increase is based on the recent rally in thermal coal prices, which is most pronounced for high-grade thermal coal predominantly sold to Japan and South Korea. Beijing's informal restriction on Australian imports has led to large discounts for mid-calorific Australian coal that has led to a two-tiered price across most coal blends, creating added complexity across coal supply chains, according to the June REQ.

Argus last assessed this higher grade coal at $128.77/t fob Newcastle on 25 June, up from $81.44/t on 31 December, with the lower grade 5,500 kcal/kg NAR coal at $73.85/t fob Newcastle that was up from $52.99/t over the same comparison. The heat-adjusted premium on a NAR 6,000 kcal/kg basis for higher grade thermal coal was $48.21/t on 25 June, up from $23.63/t on 31 December and from $8.65/t at the end of August. This record premium is higher than the around $43/t high in September 2018 that led Australian sellers to look at options to further wash coal to increase its calorific value.

The OCE's 2021 average high-grade thermal coal price forecast of $110/t fob Newcastle is up from the $66/t that it forecast three months ago. But it is lower than the average of $94/t fob Newcastle that Argus has assessed for the 6,000 kcal/kg NAR grade coal year to date for 2021.

Australia's thermal coal forecasts(mn t)
20202021 f2022 f2023 f
Global trade1,024.71,019.51,029.81,031.5
Exporters
Indonesia390.3448.0450.0442.0
Australia199.5200.1210.5213.4
Russia151.0152.0162.0166.0
Colombia55.056.057.057.0
South Africa74.480.083.080.0
US20.332.032.024.0
Importers
Asia810.2813.1826.8828.4
China218.3216.5215.7205.4
India165.1164.8169.9174.5
Japan119.0120.0120.0120.0
South Korea90.089.090.090.0
Taiwan54.055.054.353.6
Europe106.799.096.096.0
Prices
Contract price expectation June update ($/t)*70.3110.077.971.9
Contract price expectation March forecast ($/t)*68.866.267.171.3
f = forecast, *real in 2021

Thermal coal prices ($/t)

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24/06/14

S Africa's ANC, DA agree to form government

S Africa's ANC, DA agree to form government

Cape Town, 14 June (Argus) — South Africa's African National Congress (ANC) and Democratic Alliance (DA) political parties today agreed to form a government while the first sitting of the new parliament was underway. The agreement, which includes the Inkatha Freedom Party (IFP), paves the way for ANC leader Cyril Ramaphosa to be re-elected president. The parties will assume various positions in government broadly in proportion to their share of seats. The government of national unity (GNU) agreement is the result of two weeks of intense negotiations after the ANC lost its long-held majority in the national election on 29 May. It secured 40.2pc of the vote, and the centre-right, pro-market DA retained its position as the official opposition with 21.8pc. The deal scuppers the possibility of an alliance between the ANC and the two largest left-wing parties, MK (uMkhonto weSizwe) and the Economic Freedom Fighters (EFF), which credit ratings agency Fitch warned could pose risks to macroeconomic stability . MK party unseated the EFF in the election to come third, winning 14.6pc of the vote. The EFF secured 9.5pc, and the IFP came a distant fifth with 3.85pc. The MK and EFF are populist parties that campaigned on agendas including wide-scale land expropriation without compensation, nationalisation of economic assets — including mines, the central bank and large banks and insurers — halting fiscal consolidation and aggressively increasing social grants. The GNU parties agreed the new administration should focus on rapid economic growth, job creation, infrastructure development and fiscal sustainability. Other priorities include building a professional, merit-based and non-partisan public service, as well as strengthening law enforcement agencies to address crime and corruption. Through a national dialogue that will include civil society, labour and business, parties will seek to develop a national social compact to enable South Africa to meet its developmental goals, they said. The GNU will take decisions in accordance with the established practice of consensus, but where no consensus is possible a principle of sufficient consensus will apply. By Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Forecast heatwave for Japan’s Tohoku to boost power use


24/06/13
24/06/13

Forecast heatwave for Japan’s Tohoku to boost power use

Osaka, 13 June (Argus) — An unusual heatwave may hit north Japan's Tohoku region in the second half of June, which would encourage utilities in the area to maximise available thermal power units to meet expected increased electricity demand for cooling. The Japan Meteorological Agency on 13 June published its forecast that the Tohoku area, along with south Japan's Okinawa region, will experience extremely high temperatures for this time of the year over 19-27 June with more than a 30pc probability of this occurring. The short-term outlook follows Tohoku having already faced tighter electricity supplies this week because of hotter than normal weather and the absence of nearly 5GW of thermal power capacity, comprising 2.85GW of coal-fired and 2GW of gas-fired capacity, for maintenance checks and repairs. The reduced coal-fired capacity includes the unexpected and extended shutdown of the technical problem-affected 1GW Haramachi No.2 unit, which is expected to be off line over 21 May-29 July, according to a power plant operational status notice by the Japan Electric Power Exchange (Jepx). Tohoku utilities lifted coal-fired generation to an average of 4.08GW during 10-12 June, up by 3pc from a week earlier, according to nationwide transmission system operator the Organisation for Cross-regional Co-ordination of Transmission Operators (Occto). Gas-fired output rose by 9pc to average 4.03GW, while oil-fired generation increased by 25pc to average 138MW during the period. Utilisation of coal-fired and gas-fired generation units reached an average of 78pc and 65pc respectively across 10-12 June, with oil-fired units at 23pc, according to an Argus survey based on Occto output data and operational power capacity provided by Jepx. Occto has ordered the Tepco Power Grid to supply electricity to the Tohoku Electric Power Network to avoid possible outages in the Tohoku area. Tohoku plans to secure up to 550MW for 3.30-5pm and 500MW for 5-8pm Japan time on 13 June. This followed Occto's similar order to Tepco to send to Tohoku up to 300MW for 6-7pm on 11 June and 300MW for 5.30-7pm on 12 June. The power reserve level in the Tohoku area was 2.82pc for 5.30-6pm on 13 June, below a minimum 3pc level necessary for any emergencies such as a spike in peak power demand and an unexpected shutdown of power plants. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US coal unit closures to pick up in 2025


24/06/12
24/06/12

US coal unit closures to pick up in 2025

Houston, 12 June (Argus) — US coal-fired power plant unit retirements are expected to accelerate next year after falling in 2024, putting more downward pressure on coal demand. There are 34 coal-fired units in the US projected to retire in 2025, compared to the 11 units expected to close this year, according to Argus ' coal plant retirement database. The closures next year will take a total of 14,532MW of summer generating capacity offline, climbing significantly from the combined 3,629MW expected to be removed in 2024. The anticipated retirements occurring this year are down from the closures of 23 units last year. Those 2023 retirements removed 10,577MW of summer capacity from the market. US coal demand is expected to decline more significantly as a result of the increased retirements expected in 2025. Next year's retiring units took a combined 39.6mn short tons (35.9mn metric tonnes) of coal in 2023, according to US Energy Information Administration (EIA) fuel receipts data, while the units closing in 2024 took a total of 9mn st last year and 11.3mn st in 2022. Most of the coal power being taken offline in 2025 will come from the central and eastern US. Coal units operating in the Midcontinent Independent System Operator make up about 39pc of the capacity shutting in 2025, while PJM Interconnection coal units made up 27pc. Those 2025 closures include three units at Consumers Energy's J H Campbell coal plant in Michigan with a combined capacity of 1,440MW, and two units at Talen Energy's Brandon Shores coal plant in Maryland with a combined capacity of 1,270MW. However, the western US will also lose a notable portion of coal power in 2025, with the Los Angeles Department of Water and Power deactivating the Intermountain Power Plant's units 1 and 2 in Utah, removing 1,800MW of coal capacity. By Anna Harmon Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan’s Kyushu to shut Sendai 1 reactor for maintenance


24/06/12
24/06/12

Japan’s Kyushu to shut Sendai 1 reactor for maintenance

Osaka, 12 June (Argus) — Japanese utility Kyushu Electric Power today announced plans to close the 890MW Sendai No.1 nuclear reactor on 14 June for a turnaround for around three months. Kyushu will shut the No.1 reactor at Sendai in southern Japan's Kagoshima prefecture on 14 June for regular maintenance works. The reactor is expected to resume test generation in the final phase of the turnaround on 29 August, according to a power plant operational status notice by the Japan Electric Power Exchange. Kyushu aims to complete the entire turnaround process on 25 September. The absence of the Sendai No.1 reactor will not adversely affect Kyushu's electricity supply, even during the peak summer demand season that typically runs over July-September. The company plans to continue operating its three other reactors during the summer period. The Kyushu area is anticipated to secure more than a 13pc surplus in electricity supply during July-September, well above the minimum 3pc reserve level required for any emergencies such as an unexpected shutdown of a power plant and a surge in peak electricity demand. But Kyushu's operational nuclear capacity in July-September is forecast at an average of 3,388MW, down by 562MW compared with the same period in 2023. The potential fall in nuclear output could theoretically increase LNG demand by around 162,200t, around 2-3 standard sized cargoes, in July-September against a year earlier, assuming an average gas-fired generation efficiency of 50pc. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

India’s NTPC eyes more thermal power capacity


24/06/10
24/06/10

India’s NTPC eyes more thermal power capacity

Singapore, 10 June (Argus) — Indian state-controlled utility NTPC plans to issue tenders for the construction of about 15GW of thermal power generation capacity by March 2027 to meet anticipated demand growth. Increased capacity typically boosts coal consumption. "As part of our overall energy security plans, we are actively considering awarding thermal capacity of 15.2GW in [the] near future. This is in addition to 9.6GW thermal capacity already under construction," the company said. Of the planned 15.2GW capacity, tenders for 10.4GW will be issued in the current April 2024-March 2025 fiscal year, NTPC said. Tenders for another 3.2GW will be issued in 2025-26, followed by 1.6GW in 2026-27, it added. NTPC Group had an installed generation capacity of 76GW as of 31 March, up by 3.9GW from the year earlier. It plans to reach 130GW capacity by 2030 through a mix of conventional and renewable energy. It is expanding thermal power capacity at a time when Indian private-sector utilities have largely stopped developing new coal-fired projects. Indian private-sector utilities, such as Tata Power and JSW Energy, have shifted from developing new thermal generation capacity to focusing on renewables . NTPC also plans to step up its coal production to partly reduce a reliance on external supplies. It aims to raise coal output to 50mn t/yr over the next three years, up from 34.4mn t produced in 2023-24. It received a record 241mn t of coal in 2023-24, up by 7.6pc from a year earlier to meet rising demand. This also included 9.6mn t of imported coal, down by 34pc from a year earlier. Government push India's federal government plans to add about 80GW of thermal power generation capacity by 2031-32 to meet an anticipated increase in power demand, in a boost for future coal consumption. The country's power demand has increased at an unprecedented rate because of its rapid economic growth. "India needs 24x7 power supply for growth and we are not going to compromise on its availability," India's power ministry said in November 2023. "This power cannot be achieved by renewable energy sources alone. Since nuclear capacity cannot be added at a rapid pace, we need to add coal-based thermal capacity." The ministry urged the power industry to plan for capacity additions over the next 5-7 years. India will need to increase its coal-fired power generation capacity to 259.6GW by March 2032 from the current 211GW, according to the country's national electricity plan (NEP). The NEP, announced by the Central Electricity Authority (CEA) in May 2023, said India will need to raise its current coal-fired capacity to meet the country's projected peak electricity demand of 2,473.8TWh in 2031-32. The CEA also projects coal-fired capacity rising to 235.1GW by 2026-27. By Ajay Modi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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