Source: Institute for Energy Economics and Financial Analysis
Commodity trader Noble Group sees thermal coal prices coming under pressure over the next few years given an oversupply and waning demand from Europe where natural gas and renewables are gaining a greater market share, analyst Rodrigo Echeverri said on Monday.
“The coal market in Europe is on a very steep decline from which it is not likely to recover,” he said. Futures prices for coal and natural gas also point to gas remaining as a more economical source of power generation, further depressing the outlook for coal.
In South Korea, coal and gas generation have both lost ground to nuclear generation. Nuclear energy has climbed back up to 14,000 Gigawatt hours. The Korea Coal and Gas demand should decline 3.7% decline year on year against 2018. That would mean an approximately 9,205 Gigawatt hours less supply of electricity generated from coal.
China’s imports look pessimistic in light of macro slow-down and strong domestic output. Construction activity was very strong last year, but it is starting to slow-down again.
India remains one of the few potential growth areas in the market. Power generation is growing at twice the rate of China.
“Because of the magnitude of the oversupply” all coal producers have to consider cutting back output, Echeverri told participants at the Coaltrans conference in Indonesian island of Bali.