Asian coal market to tighten thanks to rising demand for power

According to Surabhi Chopra, an analyst who attended a recent coal market conference in Singapore, spokespersons from many coal-consuming Asian nations have highlighted their growing demand for coal for domestic power generation, thus limiting their ability to export coal.

Speakers from India and China in particular were very positive with regard to their country’s future demand for coal, pointing out that India is expected to add 78GW of power by 2012, with power demand forecasted to rise from 147GW to 950GW by 2030, while China is expected to see its power demand double by 2020.

It was also noted that while Vietnam is currently exporting around 50 per cent of its coal production or 24Mta, but this is expected to fall to eventually 3Mta as a result of greater domestic demand, despite production expected to over double by 2025. A similar scenario is expected to play out for Thailand, with market participants expecting its coal consumption to rise from 34.5Mta in 2008 to 48.6Mta by 2021.

Indonesia’s coal output reportedly rose to 240Mt in 2009, of which 70 per cent was exported. Given that the country is expected to add 20GW of new generating capacity by 2015, this percentage is expected to decline in the coming years. The electricity sector currently represents 65 per cent of the nation’s appetite for coal, with the cement industry in second place.

However, Japanese coal demand has been predicted to decline as a result of government policy aimed at reducing CO₂ emissions and a new tax law on coal which will reduce its competitiveness compared to other fuels (The Jakarta Post).