SIGN UP

COMPANY INFORMATION
Company Name*
Website
Email ID
Phone
Company Address*
Company State*
Company City*
Pin Code*
 I agree to the Terms and Conditions.
captcha image
< BACK       

India to surpass China as largest importer of coking coal by 2025

Share:            
news
Source: pexels, May 25, 2019

Fitch Solutions maintains its forecast for an average coking coal price of $195/t for this year, stating that prices will remain elevated, with strong demand from China’s steel sector, as US–China relations continue to deteriorate and the probability rises of further economic support from the Chinese government towards domestic industries.



On the supply side, the consultancy company expects production misses from Australia to keep the coking coal market tight in the coming quarters as large diversified miners lose their appetite for mining coal.



“Although we are more positive on coking coal prices in the coming quarters than we were a year ago, we continue to maintain our view that prices will ease in the long term, as the Chinese steel sector resumes its slowdown and the demand for Australian coking coal softens.”



Fitch says the steel sector in China accounts for two-thirds of global coking coal consumption.



High-frequency indicators show that, while the largest importer of Australian coking coal, India, saw an 11.7% year-on-year decline in coking coal imports from



Australia in the first quarter of the year, China – the second largest importer of Australian coking coal – increased imports by 35% year-on-year in the same period.



Fitch explains that this is despite environmental checks at Chinese ports and port delays, as Australian coking coal remains cheaper than imports from the US.



Chinese authorities have also imposed a lower quota on imported coal at specific ports in 2019 than in 2018. For example, in China’s Liaoning province, the combined quota for imported coal – thermal and metallurgical – in the city of Dalian for this year has been lowered to 12-million tonnes, compared with 16-million tonnes last year.



Nevertheless, Fitch says healthy coal import quotas at other ports in the country have buoyed Australian coking coal demand and prices.



Beyond 2020, Fitch anticipates Australian coking coal prices to continue on a multiyear downtrend, driven largely by a resumption in the slowdown of the Chinese steel sector and environmental concerns limiting coal imports.



“Despite the [Chinese] government’s support to the economy, it is unlikely to be aggressive, owing to constraints in the form of high debt and a volatile housing market.



“As the pipeline of construction projects thins and existing ones reach completion over the coming years, the steel sector, and by extension coking coal demand, will slow, which will lead to a downward price trajectory for imported Australian coking coal,” notes Fitch.



Fitch expects China’s coking coal consumption to stagnate out to 2028, compared with a yearly average growth rate of 5% over the last ten years. That said, India should become increasingly important in terms of seaborne demand.



Fitch notes that India is already the largest importer of Australian coking coal, accounting for 24% of total imports from the country in 2018. “We forecast India’s coking coal consumption to grow at a yearly average rate of 5.4% between 2019 and 2028, driven by an equally robust expansion in steel production in the country.



“As a result, India will overtake China as the largest importer of global coking coal by 2025, despite the country only importing half as much as China in 2017.”



PRODUCTION



On the production side, Fitch says China will maintain its dominance in the producers’ market for coking coal, with absolute coking coal production increasing from 536-million tonnes this year to 551-million tonnes by 2028, with production in 2028 being triple that of the second-largest producer, Australia (184-million tonnes).



“This is despite growth slowing from 2.8% between 2009 and 2018 to 0.4% during 2019 and 2028.



“By 2026, Russia will surpass Indonesia as the third-largest coking coal producer in the world.”



Over the years, China, Australia and Indonesia will slowly lose the global market share of coking coal production to Russia, India and Mongolia. With 157-billion tonnes of coal deposits, Russia holds the second-largest recoverable coal reserves in the world.



In the longer term, Fitch believes coal mine production in Russia will be



supported by President Vladimir Putin’s efforts to develop the industry. According to the Ministry of Energy, the Russian government will spend an estimated $123-billion on the coal sector between 2012 and 2030.

News Source: Mining Weekly
Share: