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India will be the biggest driver of growth, the IEA says, while China’s demand will likely plateau in 2022

GLOBAL coal demand will continue at stable levels through to 2024, according to the International Energy Agency.

Despite pressure from environmentalists about curbing coal use, consumption will continue mainly due to manufacturing and energy needs of a growing population. 

After a rebound in demand to reach a record in 2018, this year saw an overall decline in coal-power generation, which “appears to have resulted from particular circumstances in some specific regions and is unlikely to be the start of a lasting trend,” the IEA said in a report.

But the stability could be “undermined” by stronger climate policies from governments, or lower natural gas prices.

The outlook is supported by the “resilient” Chinese market, which accounts for half of global consumption. But its dependence on coal for power generation will fall to 59% in 2024 from 67% last year as it tries to cut air pollution.

The IEA thus expects coal demand in China to plateau by 2022, with a slow decline thereafter.

The outlook counts on India continuing to be a driver, with growth of 4.6% per year to 2024, according to the IEA.

Coal demand in southeast Asia is also forecast to grow by more than 5% per year through 2024, led by Indonesia and Vietnam, it said, adding that the region’s strong economic growth will lead to higher electricity and industrial consumption, which will in part be fuelled by coal. 

United Nations plea to halt coal use

A United Nations report issued at the end of November said it was “ramping up pressure” on countries to end their reliance on coal owing to concerns about climate change.

Some countries have taken heed, such as the UK, which is expected to completely phase out coal in the next few years, while Germany has agreed to stop use of coal by 2038, according to the report. Eight other European Union countries have said they will put an end to coal use by 2030.

Elsewhere, Chile has pledged to close all of its coal-fired power stations by 2040, while South Korea will close 10 plants by 2022, it said.  

According to brokerage Simpson, Spence and Young, a “near-term negative” for coal import demand in the Pacific has been measures by China and South Korea to combat winter pollution. The measures, which are likely to remain in place until March, will see at least 10 coal-fired power plants switched off in South Korea.

SSY expects South Korea’s imports to slide to 110m tonnes in 2019 from 117.5m tonnes last year as a result of the closures. A further five are slated to halt by February 2020.

“The country’s steam coal imports are set for fresh disruption,” SSY said in a report, as six plants are expected to be permanently shut by the end of 2021. 

Banchero Costa’s head of research Ralph Leszczynski said South Korea’s trade patterns have been unusual this year, with a poor first half in terms of coal imports followed by a strong second half. In previous years, there has not been any clear seasonality, with volumes steady through the year.

He expects this unusual trend to continue in 2020.

In the first six months of 2019, the country imported 59.4m tonnes, 4.8% below the same period last year, while it imported 46m tonnes in July to October, which is a gain of almost 9% from 2018’s levels, he said, adding that he expects at least 11m tonnes to have been imported in November based on vessel tracking data, up 16% from the same month last year.

According to the IEA report, exporters in the Pacific basin will do better than those in the Atlantic as Asian demand continues to be strong.

“With the collapse of the European market, Atlantic producers, including the US and Colombia, struggle, whereas Australia and South Africa fare better,” the IEA said, adding that Russia is increasingly targeting Asian markets, while Indonesia’s domestic needs will eat into exports.