Mexico’s Comision Federal de Electricidad imported about 6mt last year, which was about 0.8mt higher than the year
before. This year, CFE is expected to require a similar amount of
thermal coal. By the end of 2015, the national utility had coal
stocks sufficient to see it through to June this year at the
Petacalco power station. Steady demand this year is likely to increase after 2017 if the Pacifico II and Pacifico III power stations are commissioned. These have a combined capacity of 1,400MW. In the mix recently, there was lower hydro generation in 2015 due to lower rainfall, but nuclear generation grew by some 25%. Gas also competed with coal in 2015 as prices were lower.
Peru’s thermal coal demand is
based on the 135MW Enersur power
station, and it amounted to 0.07mt in
2015. High coal stocks and
competition from hydro, gas and oil at the other generating facilities in the country caused thermal
coal demand to decrease last year from a more usual 0.3mt.
This year the total is likely to increase to more than 0.3mt. No
new coal-fired power stations are planned for Peru, but there
are plans to build an interconnection with Chile with a possible capacity of 1,000MW. Demand for coal from the cement sector
is facing competition from petcoke and Peru’s domestic
anthracite resource. Cement producers Unacem and Pacasmayo
required about 0.2mt last year, but this is forecast to decrease to
about 0.18mt in 2016. Peru’s total coal imports reached about
0.3mt in 2015 which was a decrease of some 0.2mt compared to 2014. Enersur is forecast to require more imports this year.
Demand for thermal coal imports in the United States was lower in 2015 compared to the previous year at under 10mt.
Most of this was supplied by Colombia which was able to
increase its trade by a few hundred thousand tonnes at the
expense of shippers from Venezuela. Indonesian shipments to lower last year compared to 2014. Thermal coal imports have been in competition with low gas prices in the US for power
generation, seeing some of the lowest ratios in the fuel mix
during 2015. The milder weather as winter approached, also led
to lower deliveries being required by domestic suppliers at the end of the year. Stockpiled coal was
used where possible as levels had
been approaching maximum capacity
on the pads in some cases, further
reducing demand for imported
thermal coal.
US consumers have been seeing
excess supply despite reductions in
output to try to address the
imbalance in the market during 2015.
This has not been positive for
international trade and so the levels
of thermal coal imports has been low.
Forecasts have suggested that there
will be little change this year, and with
2017 far enough away, some were
predicting that as the earliest any change might begin to be seen. A rise in the price of natural gas
is expected to be one main prerequisite for an upturn in the
thermal coal market in the USA at this stage. With little
movement so far this year, things continue to be depressed for
producers in the country. The main coastal buyers of imported
thermal coal keep an eye on bargains in the international market amid such conditions, and some tonnage still finds its way to the
US ports at the time of writing. However, demand remains
fundamentally low. Total thermal coal imports for 2016 are
expected to be lower than they were last year, with the situation
remaining unclear into 2017.
Canadian thermal coal imports were low in 2015 at around
2mt and are expected to decrease this year due to additional production
at the Donkin mine which is
expected to supply Nova Scotia’s
Lingan power station. Most of the
imported thermal coal came from
Colombia, with the USA making up
the remaining 12% or so. The main
consumers of coal include Nova
Scotia Power which can burn almost
3mtpa as well as several hundred
thousand tonnes of petcoke.
Imports, mainly from Colombia have
been shipped to Point Tupper and
Sydney for consumption at the
Trenton and Lingan power stations.
New around 1mtpa of thermal coal at
present, as well as around 200ktpa of
petcoke.
On the supply side, Canadian thermal coal exports were down by around a third last year compared to 2014 at a couple of million tonnes or so. The Asian markets were weaker during the year with Japan remaining the key buyer amid the fall in demand for imported Canadian coal there.
Shipments to Taiwan decreased by over two thirds, and China showed little interest throughout the year.
Despite the weaker export market, Ridley Terminals reported an increase in exports of 32% in 2015 compared to 2014 amounting to 1.97mt. This was 0.48mt higher than was
reported in 2014. December was a busy month last year, with
0.31mt reported shipped. Some of that tonnage is believed to
have been US product from the Powder River Basin. On other
side of the country, Nova Scotia Power is expected to take
thermal coal from the Donkin mine over the course of 2016,
Brunswick Power imports which is mainly a coking coal operation. It has a capacity of
3.6mtpa but is not expected to produce that much coal this
year. Some exports are possible through Sydney, Nova Scotia, so
this operation could impact the trade figures in the export and
import markets in the coming years. Colombian and US traders
are likely to be mainly affected. The state of the coal market is
keeping development of the large resource at the Vista project in
Alberta on hold. If conditions were
favourable, the mine could produce
well over 10mtpa and export through
Ridley Terminals on the west coast
into Pacific markets. Canada’s export
trade is expected to be fairly flat for
this year and the foreseeable future
after the decreases seen in 2015.
The US thermal coal export
market was also depressed in 2015,
with around 24mt shipped. This was
half the level seen just three years
earlier. The US is exhibiting its
historic role as the swing supplier in
the market, entering when prices are high but being less active when prices are low. Competition
from Colombian exporters into the Atlantic markets both north
and south also affected exports last year, and this is expected to
continue this year. One sector that did see some positive
results in 2015 was the demand from India for Illinois coal,
recording more than 2mt shipped which was over twice that seen in the previous year. Indian
demand for this product this year,
however, is expected to be lower.
Production cuts in the USA are
expected to continue this year and
for the foreseeable future following
the substantial decrease of some
100mt last year. With weak demand
in the domestic markets as well as
little opportunity for improved
business in the export sector, the US
coal miners are facing a prolonged
difficult time. There appears to be
little prospect of improved demand
for US coal of all qualities at the time
of writing. The start of this year saw
declines in output while coal stocks were also plentiful during the winter months. Electricity
generators had been seeing the highest stock levels for more
than two years at that time. Weather patterns have not helped
coal consumers to significantly reduce their stockpiles either.
Competition from low gas prices has also hindered the thermal
coal sector, and low oil prices have been persisting during the past months of 2016 as well. Low
prices for coal in the US are
expected to remain at present, and
with a similar softness in the
international markets the motivation
to reduce coal output will continue,
probably until 2017 or later.
Given the subdued international thermal coal market the expectation has been for a further decrease in US coal exports this year. Some forecasts have suggested a decline of some 10mt by the end of 2016. Next year is expected to see some further decreases but perhaps to a lesser extent than the previous couple of years. The only market with reasonably firm demand is India, but shipments of Illinois Basin
coal are not going to be large in this environment of low prices.
India has also been looking to import higher quality material
than has been the case in the past.
Colombian thermal coal exporters bucked the trend in 2015
and recorded an increase in shipments to 80.5mt. This was an increase of 5.5mt or 7.3% compared to the previous year, but it
was still below the optimistic target of 84mt set earlier by the
Colombian coal producers. Their main markets in Europe were
weak in 2015 but economics allowed them to compete strongly
with the likes of the USA, South Africa, and Russia throughout
the year. They may have shipped even more, displacing competitors’
tonnage, if there were not the
restrictions on coal railing in
Colombia. Night time transport from
the mines to the ports on the
Fenoco rail line had been restricted
on environmental grounds.
Drummond was able to return to full
activity in 2015 after the port
disruption in 2014. The company
exported 27.9mt of thermal coal
which was an increase of 6.1mt
compared to the previous year.
Cerrejon and Glencore had a weaker
year in 2015 with 33mt and 16.4mt
exported respectively.
The Colombian thermal coal exporters increased their
shipments into Europe by about 4.6mt in 2015 taking the total
to that region to 57.6mt. Buyers in Turkey and Portugal took
advantage of lower prices, as well as those consumers in Italy.
The Netherlands also recorded increased intake of Colombian
thermal coal which was destined for various northwest European end users. The United Kingdom was not taking as
much however, and the total Colombian tonnage imported in
2015 decreased by around 2.8mt overall as coal-fired power
station closures largely to comply with European Union
emissions regulations took a further toll on the United Kingdom coal sector. Contract tonnage to
consumers in the southern USA also
proved firm during 2015, with some
6.3mt shipped there. This was
actually an increase of 0.8mt
compared to 2014. Growth in
exports of thermal coal was also
recorded to Brazil with an extra
0.6mt sent there last year. Guatemala
also imported 0.5mt more
Colombian thermal coal in 2015
which helped make up some of the
1.3mt decline in demand from Chile.
Pacific thermal coal markets declined
by some 0.9mt during 2015.
Border closure between Colombia and Venezuela in August 2015 due to suspected criminal activities affected coal shipments through the
Venezuelan ports. Some 0.3mt is believed to have been involved
by the end of the year. The Venezuelan coal industry saw further
contraction in 2015, recording a decrease of 0.4mt in thermal coal exports to just 1.6mt compared to 2014. The main coal
exporters, InterAmerican and Carbones de la Guajira shipped
just 0.52mt and 0.82mt respectively. The increase in exports to
the USA and Guatemala by Colombian shippers mentioned
above was at the expense of the Venezuelans who saw a
decrease of 0.12mt and 0.14mt to those countries respectively.
Guatemala only imported 66kt of Venezuelan coal in 2015 while the
USA took only 180kt. The European
markets took 62kt less thermal coal
from Venezuela last year, and the
exporters sold 92kt less material to
the Asian consumers compared to
2014. This year is expected to
remain a difficult one for the
Venezuelan coal sector, with little
improvement likely for the
foreseeable future.
The coal industries in the
Americas are coping as best they can
in this ongoing depressed
environment during 2016. There may
be some improvement next year, but with market fundamentals being the way they are, until there is a
significant change in the supply demand balance, low price
environments will continue to damage producers. With signs of
an improvement in some markets in recent weeks, there has been some
optimism from
some coal
investors. They
are, however,
looking at things
from a
depressing
position which
they have had to
endure for a
number of years
now. Coal trade
in the Americas
during 2016 is
looking to be
varied, and some
will be luckier
than others.
Dr Tim Jones is Director of e-coal.com Consultancy and Editor of the
weekly publication Coal Market Intelligence which covers 11 spot
markets worldwide, gives key information on the latest deals and
tenders, company news, people and jobs, industrial relations, and
ports, shipping, and freight rates. DCi