Hill & Associates Forecasts Healthy World Seaborne Demand
Hill & Associates released its latest study titled “International Coal Trade–Supply, Demand and Prices to 2025” during October’s CoalTrans 2007 in Rome. The study identifies the major trends in the International Coal Trade (ICT) and looks at the outlook for coal demand and supply and coal prices out to 2025.
“Looking at the long term, from 2016 to 2025, we forecast that demand will outpace supply, leading to the markets tightening significantly which will drive prices up toward 2025,” said Daniel Walton, head of Coal Sales and Account Management for Hill & Associates. “We attribute this to undeveloped economic reserves becoming scarcer. This really is a wake up call for the industry to focus its attention on exploration and development of new projects. We forecast that world seaborne coal demand will reach 1 billion metric tons (mt) by 2025, from 770 million mt today. Therefore for supply to meet rising demand, new reserves are a must.”
Hill & Associates’ report looks at the major trends in the ICT and identifies two distinct periods. “In sharp contrast to the long term picture, between 2009 and 2015, we foresee that supply, across all coal types, will overcome demand. This is a supply-driven phenomenon which is a result of several existing constraints, at ports and on rail lines, being eliminated during this time, coupled with additional supply coming on-stream from committed and planned coal development projects,” said Walton.
The study also concludes that Asia will continue to be the main driver of seaborne coal trade for the next 20 years, particularly as industrial activity becomes focused on developing countries in the region.
“Asian metallurgical coal importers, led by India, China, Korea, and to a lesser extent Taiwan, will drive demand in this sector. We forecast Indian metallurgical coal imports to increase by almost 53 million mt and China by 24.8 million mt by 2025. Korea and Taiwan’s demand will grow through plant expansions and new coking capacity. On the supply side, the three majors–Australia, Indonesia, and Colombia will account for a remarkable 91% of growth in steam coal supply from now to 2025,” Walton said. “There are some interesting market dynamics at play–Chinese steam coal exports are forecast to continue to decline, placing a considerable strain on the expansion potential in Indonesia and Australia to supply Asia Pacific demand.”
According to the Hill & Associates study, Colombia is expected to supply most of the required growth in steam coal exports in the Atlantic basin, with annual exports from Colombia and Venezuela increasing by 86 million mt.