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Coal demand will pass 9 billion t by 2019

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World Coal,

Global coal demand growth will continue to slow but will pass 9 billion tpy by 2019, according to the latest Medium-Term Coal Market Report from the International Energy Agency (IEA). China will account for 60% of demand growth over this period, despite efforts to moderate its coal consumption, with Asia-Pacific in general the “main engine” for growth in demand, offsetting declines in Europe and the US.

“We have heard many pledges and policies aimed at mitigating climate change but, over the next five years, they will mostly fail to arrest the growth in coal demand,” said Maria van der Hoeven, IEA Executive Director, at the launch of the report.

The IEA reckons coal demand growth will average 2.1%/yr to 2019. This is down from the 2.3%/yr it forecast in 2013 for the five years to 2018 and compares to the actual growth rate of 3.3%/yr between 2010 and 2013.

“As has been the case for more than a decade, the fate of the global coal market will be determined by China,” the agency said in a press release, noting that the country that is the world’s largest producer, user and importer has started a push to diversify its energy supply and reduce its energy intensity. “The resulting increase in gas, nuclear and renewables will be staggering,” concludes the IEA; “however […] despite these efforts and under normal macroeconomic circumstances, Chinese coal consumption will not peak during the five-year outlook period.”

Beyond the headline figures, however, the report notes significant uncertainty over government policy that could “sharply affect coal market fundamentals” – particularly in key markets like Indonesia, South Korea, Germany and India, where policy changes likely to affect coal have been announced. “The possibility of these policy changes becoming a reality is compounding uncertainty resulting from the current economic climate.”

The report also points to some relief from low coal prices provided by lower oil (and therefore fuel) prices, as well as currently depreciation in the main exporting countries. Coupled with a concerted effort from mining companies to reduce production costs, these trends have helped to reduce the price floor for coal and helped miners withstand further economic climate.

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