global thermal coal demand slower

Global thermal coal demand seen to grow at slower pace: ABARE

Mon 22 Sep 2008, 7:12 GMT

[-] Text [+] By Fayen Wong

PERTH (Reuters) - Global thermal coal demand will probably grow at a slower-than-expected pace in 2009 amid slower imports from Europe and Japan, the world's No. 1 thermal coal importer, an Australian government forecaster said on Monday.

Total demand growth for thermal coal in 2009 was revised down to 3.2 percent from this year to 744.9 million tonnes, versus an earlier growth forecast of 3.7 percent at 730.7 million tonnes, the Australian Bureau of Agricultural and Resource Economics (ABARE) said in its September quarterly bulletin.

The agency trimmed its growth forecast for Asian coal imports in 2009 to 3.2 percent at 410.9 million tonnes, versus an earlier estimated growth rate of 5 percent to 415.8 million tonnes.

"Japan's imports of thermal coal are forecast to decline by 3 percent to 130 million tonnes in 2009 because of a recovery in the utilisation of nuclear power capacity as operations resume at a number of nuclear power plants," ABARE said in a report.

The bureau also cut its outlook for European coal imports in 2009 to rise by just 1 percent, down from its previous estimate of 1.8 percent, largely due to lower coal consumption in Spain and Germany. But it has raised the overall imports numbers in 2009 to 232.8 million tonnes from an earlier forecast of 217 million tonnes due to updates to the 2007 import figures.

ABARE said the rise in global demand is expected to be met by higher exports in key producing countries, including Australia, Indonesia and Colombia, on the back of new projects and increased infrastructure capacity.

Prices for coking coal, used in steelmaking, are expected to remain high, with many of the drivers that have brought a tripling of contract prices for premium hard coking coal to about $300 a tonne remaining in place.

"Despite an expected slowdown in developed economies in 2009, metallurgical coal prices are expected to remain around current levels in the short term, underpinned by Australian infrastructure bottlenecks, increased export taxes on metallurgical coal and coke in China and strong steel production growth in developing economies," ABARE said.

CHINESE THERMAL COAL EXPORTS TO FALL

The price of thermal coal, used for power generation and in the making of cement, touched a record high of $201 a tonne in early July, but has since shed about $60 on expectations of lower European demand and similar losses in the oil and gas markets.

Chinese thermal coal imports are expected to remain steady at about 43 million tonnes in 2009, but exports from the nation, currently world's sixth-largest coal exporter, were forecast to drop nearly 12 percent to just 37 million tonnes next year -- making China an overall importer of the fuel, ABARE said.

ABARE said thermal coal exports from Indonesia, the world's largest thermal coal exporter, are forecast to increase by 6.9 percent in 2009 to 217 million tonnes, after an estimated 6.5 percent growth in 2008.

In Australia, the world's second-largest thermal coal exporter, thermal coal exports are forecast to increase 7 percent to 122 million tonnes in the fiscal year to June 2009, thanks to the commencement of new mines and mine expansions by producers such as Xstrata and Anglo Coal, said ABARE. ABARE'S THERMAL COAL OUTLOOK

2007 2008* 2009* --------------------------------------------------- Imports (million tonnes) Asia 378.1 398.1 410.9

China 41.4 40.0 43.0

Chinese Taipei 61.3 64.0 65.0

India 30.7 34.0 39.0

Japan 128.3 134.0 130.0

Korea 65.8 72.0 77.4

other Asia 34.9 37.6 38.9 Europe 230.5 230.4 232.8 Other 87.9 93.2 101.2 Exports (million tonnes)

Indonesia 190.7 203.0 217.0

Australia 112.2 119.3 125.0

Russia 85.2 80.0 81.0

South Africa 65.8 65.0 67.0

Colombia 67.2 70.0 73.0

China 50.7 42.0 37.0

United States 24.2 27.0 26.0

Others 100.5 115.3 118.9

* ABARE's forecast