Global Non Coking Coal Trade to Go Lower: Australian Report

World Non Coking Coal trade is going to decline by 2.4% to 1 BnT in 2017 as the major importing countries will rely on their respective domestic production, says a recently released report by the Office of the Chief Economist in the Department of Industry, Innovation and Science of the Australian government.

According to the report, the global Non Coking Coal trade is going to decline by 2.4% to 1 BnT in 2017. The imports are forecasted to shrink due to the lower import demand from China, India and South Korea. In the following year, 2018, the imports are forecasted to go further down by 2.1% to 990 MnT; thereafter another round of decline by 0.4% to 986 MnT in 2019 is also forecasted in the report.

In China, the largest consumer in the world, the domestic production levels will go up as that government has eased the production norms.  In the second largest consumer, India, the domestic production is rising, rendering abundant availability of domestic coal, and that will cut imports. In Japan, the imports are expected to remain steady during the forecast period due to uniform coal-fired power generation. In South Korea, the imports are expected to decrease due to the mandate of the newly elected President to curb coal consumption. Japan and South Korea are regarded as the third largest importers of Non Coking Coal.

The lower import appetite of the key importing nations will clearly reduce exports by the prominent export nations. Non Coking Coal exports from Indonesia are expected to decline by 1.3% to 375 MnT in 2018; and to further decrease to 373 MnT in 2019, according to the report.

CoalMint COMMENT: The imports going lower will mean the prices of Non Coking Coal will decline in the major international markets. This might create price differentials between the domestic coal and landed costs of imports in the key importing nations, like India and China. If the landed costs of imports become lower than the domestic prices, then buyers in the importing countries might be tempted to procure their requirements from foreign nations to maximize profit margins. In such cases, the declining import forecast in the report might eventually not take the full effect.