China's intake of thermal coal shipments from countries including
Australia and Indonesia is forecast at 157 million mt for the fiscal year
ended June 2015, representing a 31% decrease on traded volumes of 229 million
mt in the preceding fiscal year period, said the Australian government in a
"China's imports [of thermal coal] are forecast to decline by 31% to 157
million [metric] tons in 2015, before recovering slightly to 160 million tons
in 2016," said Canberra's Office of the Chief Economist in a report on
Australia's resources and energy sectors.
"Over the remainder of 2015 and 2016, China's import growth will continue
to be challenged by slowing economic growth, strong hydroelectric output and
measures to support the domestic industry," said the report's section on
thermal coal written by economist Kate Penney.
Chinese government attempts to improve air quality in the country's
cities is also impacting demand for imported thermal coal, said the report.
Spot prices for Australian thermal coal are expected to remain under
pressure for the rest of 2015 and into 2016 because industry response to
overproduction and overcapacity to date has been insufficient to reduce an
overhang of supply in the market, said the report.
"However, the supply response has been delayed because of limitations to
changing infrastructure supply services, the depreciation of the US dollar
relative to the currencies of other major producers, and lower energy prices,"
Steady demand from other key markets including Japan, South Korea and
Taiwan in the past fiscal year helped support seaborne-traded volumes of
Australian thermal coal which increased by 3.2% to 201 million metric tons in
the 2014-15 fiscal year.
"Despite higher volumes, the value of these exports declined by an
estimated 7% to A$15.6 billion ($12 billion) because of lower prices," said
the report, and adding that Australia's thermal coal exports for the 2015-2016
fiscal year are likely to be 202 million mt.
Japan's imports of Australian thermal coal have remained steady in the
absence of nuclear power generation and uncertainty over the restart of some
nuclear power reactor units.
This uncertainty is likely to support Japan's thermal coal imports intake
at around 148 million mt in the 2015 fiscal year, and 145 million mt in the
2016 fiscal year, said the report.
The Office of the Chief Economist is forecasting a price of about $62/mt
FOB Newcastle basis 6,322 kcal/kg GAR for Australian thermal coal sold to
Japanese power utilities under year-long term contracts with an April 1, 2016
start date, an 8.5% decline on April 2015's benchmark price of $67.80/mt.
"In 2015-16, Australia's thermal coal production is forecast to increase
by 1.4% to 249 million mt," said the report.
South Korea's recent publication of its 7th Power Generation Master Plan
suggests some shift away by Seoul from coal-fired power generation over
emissions reduction concerns, but the introduction of an import tax for coal
is reducing the competitiveness of low calorific value thermal coal, said the
South Korea's imports of thermal coal are expected to rise by 2% between
2015 and 2016 to 102 million mt, said the report.
--Mike Cooper, firstname.lastname@example.org
--Edited by Alisdair Bowles, email@example.com