The seaborne thermal coal market is oversupplied by around 40mn t and a demand-supply imbalance could persist for much of this year as the Covid-19 pandemic dents economic activity.

 

This is the view of head of research at Hong Kong-based Noble Resources Rodrigo Echeverri, who said: "Without a significant supply reduction from major suppliers, it is hard to envisage how the market will balance in the short term." Echeverri's comments on a webinar organised by Coaltrans Conferences come even as some Indonesian coal mining firms start to cut production or are considering suspending mining operations as Asia-Pacific demand weakens amid lockdown measures in many countries.

 

China is likely to import 210mn t of thermal coal in 2020, compared with 217mn t last year, said Echeverri, while India is expected to import 160mn t of coal this year, down from 169mn t in 2019. But he qualified this saying that much depended on how long lockdowns lasted in many countries.

 

On the supply front, no exporting countries are adjusting production plans "on a significant level", something that "needs to happen to balance the market", he said.

 

Indonesia's coal exports are expected to drop by 8mn t on the year to 424mn t in 2020. Indonesian exports have slowed mildly so far this year, primarily due to weaker prices amid a lack of buying interest, rather than because of major supply disruptions.

 

Overall exports from Australia have not yet been obviously affected by the outbreak amid shipments to China, but thermal coal exports may drop by 4mn on the year to 208mn t, Echeverri said.

 

South African coal exports have softened somewhat amid that country's lockdown, but the curbs have not dented exports in a major way. Echeverri expects South Africa to export 74mn t of coal this year, down from 77mn t in 2019.

 

Meanwhile, Echeverri expects Colombia exports to dip by 1mn t on the year to 74mn t, while Russia's shipments are expected to remain flat this year at 137mn t.(Argus Media)