The coal industry is hurting. While the emissions heavy fossil fuel has been falling out of favor for quite a while now, this year has been particularly brutal. In no small part thanks to the spread of the novel coronavirus and the ensuing drop in energy demand, the nuclear sector is in big trouble. For just a taste of the kind of summer coal has had, here is just a small selection of the nearly uniform doom-and-gloom headlines on offer: “Renewables surpass coal in US energy generation for first time in 130 years” from the Guardian, “Coal’s Decline Continues with 13 Plant Closures Announced in 2020” from Scientific American’s E&E Energy News platform, and “The U.S. Coal Industry Is Declining Irreversibly” from us here at Oil Price. But this disaster has been decades in the making. Between the years of 2009 and 2019, coal demand plummeted 43 percent by an energy-equivalent metric, as reported by BP Plc’s most recent statistical energy review. In Europe, coal demand dropped 23 percent. The UK experienced a stunning 79 percent decline and the few active coal-fired plants it has left are growing less active all the time…Full Story
By Angelique Thakur | FN Arena
The rebound in China’s steel demand, considerably faster than expected, has left Macquarie analysts surprised. But that’s not all. Citi economists expect China to set a growth target of 5.5% in its 14th five-year plan. Admittedly, it is less than the 6.5% rate of growth aimed for by China in its 13th five-year plan. But, as Citi points out, indicates moderation as opposed to collapse of growth as was feared.
China has also indicated this growth will mostly be led by its domestic market. But what pleases Citi is the how of it. It looks like China will be focusing on developing its infrastructure. In particular, steel-intensive sectors like infrastructure, property, and automotive will be the key pillars for China’s economic growth.
This leads Citi analysts to expect steel end-use demand to increase by 1-2% (year on year) per annum during 2021-23 versus the -1% decline that was forecast earlier.
There’s more. Macquarie points towards a steel demand recovery in the US, EU and Indian markets. According to Macquarie, the three catalysts for iron ore and steel include a continued recovery in the auto sector, stimulus by countries like China (focused on infrastructure development) and new proposed construction guidelines in China that could boost steel intensity in buildings (although there is no firm timeline for this)…Full Story
Among China’s generally strong imports of major commodities in August there was one standout area of weakness – the large drop in coal.
China’s coal imports fell to an eight-month low of 20.66 million tonnes in August, down 20.8% from July’s 26.1 million and a massive 33% below the level recorded in August last year, according to customs data.
The soft August outcome meant the growth in imports in the first eight months of the year slipped to just 0.2% from the same period in 2019, down from 6.8% in the first seven months in the year…Full Story
By Min Zhang in Beijing and Emily Chow in Shanghai | Reuters
China’s iron ore imports in August fell 10.9% from a month earlier, easing from a record high in July on fewer shipments from big miners and port congestion, official customs data showed on Monday.
The world’s top iron ore consumer brought in 100.36 million tonnes of iron ore last month, according to data from the General Administration of Customs. That was down from 112.65 million tonnes in July and up 5.8% from the same period a year earlier.
“Iron ore imports in China were partly delayed last month due to coronavirus-related restrictions,” said Tang Binghua, analyst with Founder CIFCO Futures, noting that port congestion in China was heavy last month and slowed customs clearance.
Shipments from big miners in July also dipped after the end of the financial year in Australia, Tang added…Full Story
India plans to significantly reduce its thermal coal imports in “the next few years” to save foreign exchange and create jobs through the development of existing and new coal blocks, a senior official in the federal coal ministry said on Tuesday.
Coal is among the top five commodities imported by India, the world’s largest consumer, importer and producer of the fuel after China.
India spent 1.58 trillion rupees ($21.28 billion) on importing 247 million tonnes of coal, including 197 million tonnes of thermal grade, in the fiscal year to March 2020, M. Nagaraju, a joint secretary in the coal ministry, told a seminar.
“As per our assessment, we can actually substitute between 110-120 million tonnes of coal. We will not be able to do this year, but certainly we will do in the next few years,” Nagaraju said, without giving more detail on the timeframe.
He said increasing local coal production would help to improve the economies of states in central India, where most coal mines are located..Full Story
Iron ore is the first Australian commodity to crack $100 billion in annual export value, according to the Australian Government’s latest Resources Energy Quarterly report.
Australian exports for the metal reached $101.7 billion in the 2019-20 financial year, smashing the previous annual export benchmark of $77.5 billion, which was also set by iron ore in the 2018-19 financial year.
The Resources Energy Quarterly specified that while iron ore is normally vulnerable during downturns, like the current global downturn brought about by the COVID-19 pandemic, it has been resilient in recent months.
The demand for Australian iron ore has been driven by China’s infrastructure boom, as well as a weaker Australian dollar, providing the Australian market with a lifeline during tough times…Full Story
Last month, the Japanese government announced a plan to retire its fleet of old, inefficient coal-fired generation by 2030. And what happens to coal power in Japan matters a lot to Australia.
Australia shipped more than A$9 billion dollars’ worth of thermal coal to Japan in 2019 – about 12% of our total thermal coal exports.
In the short term, several new coal plants are being built in Japan to replace scrapped capacity. But there are signs investors are not flocking to invest in expensive new Japanese coal technology.
And in the long run, the investment environment for new coal technology is worsening. If Japan’s commitment to coal weakens, that will mean less demand for Australia’s exports…Full Story
Iron ore futures firmed on Tuesday, with both Dalian and Singapore benchmark contracts gaining more than $3 on expectations that steel usage in China would remain robust in the coming months and offset sluggish demand overseas.
The Dalian Commodity Exchange’s most-traded iron ore for delivery in January 2021 closed the session 3.5% higher at 863 yuan ($124.51) a tonne, rising for a fourth session in a row.
Iron ore’s front-month September contract on the Singapore Exchange climbed 3% to $120.42 a tonne in afternoon trade, extending gains into a third straight session.
“Market participants are looking forward to a strong second half for Chinese steel demand which should maintain steel and iron ore prices above previous expectations,” said Justin Smirk, senior economist at Westpac Economic Research…Full Story
South African coal miner Exxaro Resources Ltd said “As defined an essential service for providing coal to Eskom for electricity generation, as well as being an exporter, our coal operations continued operating at various capacities, while complying with the COVID-19 lockdown restrictions as implemented by the national government.
Due to the impact of COVID-19 and the subsequent lockdown, many industrial customers in the domestic market have either reduced demand or stopped coal off take during April and May.
In addition, coat exporters produced a sized coal product for the local markets due to very low export pricing. This resulted in an oversupply, negatively impacting domestic prices. It is estimated that the seaborne market is oversupplied by at least 40Mt.
We have seen the worst of the lockdowns, with negative impacts on the energy complex. The prices of both oil and gas have dropped to record levels and the API4 index price dropped to historically low levels. Markets like Vietnam and Pakistan took advantage during this period of low prices to purchase South African coal while the Indian demand fell below the normal off take…Full Story
The future of the once-booming South African coal industry is no longer what it used to be or, to use another well-known old saw, the ‘winds of change’ seem to have finally caught up with the sector that produced 259 million tons (Mt) of coal in 2019 and earned total revenues of R139.3bn.
This development is not new because the trend has been noticeable for a while. According to Minerals Council of SA statistics, net investment in the coal industry has dropped from R4.5bn in 2010 to R2.5bn in 2018 despite the fact that more than 70% of the country’s power is generated by burning coal.
But the last couple of years has seen a tsunami of adversity for South African coal producers whipped up by, among others, environmentalist lobbyists who have successfully built up pressure on financial institutions, both worldwide and in South Africa, getting many to agree not to fund new coal projects…Full Story