Long-term Trends and Outlook for Global Coal Supply and Demand · Long-term Trends and Outlook for Global Coal Supply and Demand Yasuaki Kawakami1, ... in 1989, fluctuated in the

1

Long-term Trends and Outlook for Global Coal Supply and

Demand

Yasuaki Kawakami1, Yuhji Matsuo

1, Lu Zheng

1, Atsuo Sagawa

2

Summary

Japan depends on other countries for most of its coal supply, of which more than 80%

comes from Australia and Indonesia. While coal supply has remained relatively stable, the

environment for coal supply has changed dramatically. In this paper the authors projected future

trends for steam and coking coal and assessed international coal trade flows through 2040 using a

trade flow model built with the linear programming (LP) method.

Global coal consumption has persistently increased particularly over the past decade while

interests have grown in the climate change problem. The upward trend in coal consumption, which

has been driven by China so far, will continue through 2040 with India replacing China as the

demand growth center. Given a deceleration of coal demand growth in China and a decline in coal

demand in many OECD countries, the annual average global coal demand growth through 2040 will

be slower than in recent years. But demand for steam coal for power generation will continue

increasing. A coal demand increase anticipated through 2040 will rival the remarkable growth seen

in the decade between 2002 and 2012.

As it is difficult for most countries to cover growing coal demand with domestic output

alone, international coal trade will expand. New major coal flows including those from Mozambique

to India and from Russia to Asia will be created, while Indonesia, now one of the major exporters,

will refrain from expanding exports so much due to domestic demand growth and its policy of

protecting coal resources for their effective use.

In Japan, coal will remain a key energy source mainly for power generation, taking into

account the need for mitigation measures for climate change at the same time. This paper indicated

the emergence of Mozambique as a new coking coal supplier for Japan amid future changes in coal

producing and consuming countries.

1 Energy Data and Modelling Center, Institute of Energy Economics, Japan 2 Fossil Fuels & Electric Power Industry Unit, Institute of Energy Economics, Japan

This study is supported by the Ministry of Economy, Trade and Industry (METI), which has recently permitted us to

release this paper. We thank the relevant METI officials for their understanding and cooperation.

IEEJ: June 2015. All Rights Reserved.

2

1. Introduction

Japan depends on other countries for most of its coal supply, of which more than 80%

comes from Australia and Indonesia. Coal has been viewed in Japan as featuring greater supply

stability than other fossil fuels, i.e. oil and natural gas. Since the early 2000s, however, the

environment for coal has seen great changes including a rapid China-led increase in global coal

demand, sharp coal price hikes, a coal trade flow change through the recent shale gas output

expansion in the United States and signs of coal policy changes in Indonesia, now one of the biggest

coal exporters in the world. Given these changes, it may be dangerous to view coal as remaining a

stable fuel in the future. How will coal demand change in the future? How will coal supply respond

to such change? How will coal trade flows change if coal supply and demand centers in the world

shift? This paper aims to answer these questions.

This paper is organized as follows: It details historical coal supply and demand data

(demand, supply and trade flows) by coal type and region through 2012 first before predicting coal

demand and supply thorough 2040 based on the trends and policy information available at present.

Later, the paper forecasts steam and coking coal trade flows in 2025 and 2040 using a trade flow

model, which were built based on the linear programming method.

There are many studies that predict coal demand over a medium to long term. But only a

limited number of studies may indicate quantitative coal trade flows while securing the flows’

consistency with demand. Figuring out how the global coal demand center will change from the

present to 2025 and 2040 and how the coal trade flows will change may help policymakers to

specify challenges for securing stable coal supply for the future and consider how to secure supply

sources.

2. Global Coal Supply/Demand Trends

2.1 Consumption

Global coal consumption increased from 3,756 million tons in 1980 to 4,734 million tons

in 1989, fluctuated in the 1990s and reached 7,697 million tons in 20121)2)

(Figure 2-1). Growth

from 2002 has been particularly remarkable. The annual average growth rate from 2002 to 2012

reached 4.6%. Leading the demand growth were Asian countries including China. Asian coal

consumption expanded from 2,255 million tons in 2002 to 5,023 million tons in 2012, as shown in

Figure 2-2. The increase during the decade stood at 2,768 million tons (accounting for 100%3 of the

net global coal consumption increase in the decade). Asia’s share of global coal consumption rose by

19.5 percentage points to 65.3%. China accounted for about 80% of the Asian coal consumption

increase. As a result, China logged the world’s largest coal consumption at 3,666 million tons in

3 This does not necessarily mean that there were no countries posting coal consumption increases in other regions

than Asia. Attention must be paid to consumption declines during the period in some countries including the United

States, which logged a coal consumption drop of 149.7 million tons for the period.


3

2012, far more than 822 million tons for the United States as the second largest coal consumer in the

world and 753 million tons for India as the third.

Note: Data for 2012 are estimates. Anthracite is included in steam coal.

Source: IEA, “Coal Information 2013"3)

Figure 2-1. Global Coal Consumption (by region and coal type)

Note: Data for 2012 are estimates.

Source: IEA3)

Figure 2-2. Coal Consumption by Region (10 largest coal consuming countries)

A coal consumption breakdown by use indicates a significant increase in demand for

power generation, as shown by Figure 2-3. The increase covered robust growth in electricity demand

(Million tons)

China 1,048.1 1,451.7 3,665.9 2,214.2

U.S. 818.1 971.7 821.9 ▲ 149.7

India 251.0 383.4 753.2 369.8

Russia 313.8 220.7 251.1 30.4

Germany 328.9 245.7 241.4 ▲ 4.3

South Africa 122.3 151.6 187.2 35.6

Japan 118.1 161.3 183.8 22.5

Poland 174.6 140.4 139.7 ▲ 0.7

Australia 101.6 130.3 137.3 7.0

South Korea 39.8 76.0 127.3 51.3

Others 1,100.3 994.5 1,188.2 193.7

World total 4,416.7 4,927.2 7,696.9 2,769.7

Asia total 1,573.3 2,254.9 5,023.3 2,768.4

(Share in

world total)(35.6%) (45.8%) (65.3%)

2002-2012

growth1992 2002

2012

estimates

China29.5%

U.S.19.7%

India7.8%

Russia4.5%

Germany5.0%

South Africa

Japan

Poland

Australia

South Korea

Others20.2%

China47.6%

U.S.10.7%

India9.8%

Russia3.3%

Germany3.1%

South Africa2.4%

Japan2.4%

Poland1.8%

Australia1.8%

South Korea1.7%

Others15.4%

World total7,696.9 m. tons(Outer circle:

Estimates for 2012)4,027.2 m. tons

(Inner circle:Results for 2002)

Asia Pacific

North America

Europe and FS

Africa

Latin America and Middle East

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12*

(Million tons)

Steam coal

Coking coal

Brown coal

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

'80 '85 '90 '95 '00 '05 '10

(Million tons)


4

mainly in Asia. Coal for power generation accounted for 65.0% of total coal consumption in 2011,

indicating a sharp rise from 49.9% in 1980.

By coal type, steam coal consumption in 2012 stood at 5,814 million tons (accounting for

75.5% of total coal consumption) and coking coal at 976 million tons (12.7%). Figures 2-4 and 2-5

show country-by-country coal consumption. Steam coal consumption increased remarkably as

demand expanded for coal as fuel for power generation. Annual steam coal consumption expanded

by 2,213 million tons during the decade between 2002 and 2012, accounting for 80.5% of the total

coal consumption growth during the period. By country, China consumed 3,087 million tons in

steam coal in 2012 (accounting for 53.1% of world total steam coal consumption), the United States

731 million tons (12.6%) and India 626 million tons (10.8%). The three countries captured 76.4% of

the world total.

Coking coal demand scored a greater growth rate than steam coal demand. Annual coking

coal consumption increased by 505 million tons in the decade from 2002. China accounted for

59.3% of world total coking coal consumption in 2012. Coking coal features massive consumption

in Asia including India, Japan and South Korea. Asian coking coal consumption aggregated 756

million tons in 2012, capturing 77.4% of the world total.

Note: Coal consumption for power generation includes consumption at combined heat and power plants.

Sources: IEA, “Energy Statistics of OECD countries 2013"4), “Energy Statistics of Non-OECD countries 2013"5)

Figure 2-3. Coal Consumption by Use

539 505 508 519 479 639 686 712 725 714 787 850

1,8792,262

2,562 2,8033,190

3,7964,025 4,202 4,388 4,333

4,5194,774

584

646641

675585

746775

813853 867

913961

765

902942 657

567

821816

876739 753

751759

(50%)(52%)

(55%)(60%)

(66%)

(63%)(64%) (64%) (65%) (65%) (65%) (65%)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

'80 '85 '90 '95 '00 '05 '06 '07 '08 '09 '10 '11

(Million tons)

Others

Otherindustries

Powergeneration

Cokeproduction


5

Note: Data for 2012 are estimates. Anthracite is included.

Source: IEA3)

Figure 2-4. Steam Coal Consumption (10 largest steam coal consuming countries)


Source: IEA3)

Figure 2-5. Coking Coal Consumption (10 largest coking coal consuming countries)

(Million tons)

China 962.8 1,324.1 3,086.5 1,762.5

U.S. 706.9 875.4 730.7 ▲ 144.7

India 192.6 321.1 625.9 304.8

South Africa 117.6 149.5 185.0 35.5

Japan 60.2 102.9 131.6 28.7

Russia 150.1 103.3 116.9 13.6

South Korea 25.4 56.0 95.7 39.7

Kazakhstan 60.0 36.3 76.3 40.0

Poland 94.2 69.4 64.1 ▲ 5.3

Indonesia 6.9 29.2 60.2 31.0

Others 546.5 533.7 640.8 107.1

World total 2,923.2 3,600.7 5,813.6 2,212.9

Asia total 1,328.7 1,954.0 4,194.5 2,240.5

(Share in

world total)(45.5%) (54.3%) (72.1%)

2002-2012

growth1992 2002

2012

estimates

China36.8%

U.S.24.3%

India8.9%

South Africa 4.2%

Japan

Russia

South KoreaKazakhstan

PolandIndonesia

Others14.8%

China53.1%

U.S.12.6%

India10.8%

Russia3.2%

Germany2.3%

Russia 2.0%

South Korea 1.6%

Kazakhstan1.3%

Poland1.1%

Indonesia 1.0%

Others11.0%

World total5,813.6 million tons

(Outer circle: Estimates for 2012)3,600.7 million tons (Inner circle:Results

for 2002)

(Million tons)

China 85.3 127.7 579.4 451.7

India 42.7 36.3 83.8 47.5

Russia 41.0 43.8 56.3 12.6

Japan 57.9 58.4 52.2 ▲ 6.2

South Korea 14.4 20.0 31.6 11.6

Ukraine 42.6 29.2 27.1 ▲ 2.0

U.S. 29.4 21.6 19.0 ▲ 2.6

Germany 36.2 21.9 15.3 ▲ 6.6

Kazakhstan 24.2 9.3 12.6 3.3

Poland 15.0 12.9 11.6 ▲ 1.3

Others 112.0 90.1 87.3 ▲ 2.9

World total 500.7 471.2 976.2 505.0

Asia total 208.1 248.8 755.7 506.9

(Share in

world total)(41.6%) (52.8%) (77.4%)

2002-2012

growth1992 2002

2012

estimates

China27.1%

India7.7%

Russia9.3%

Japan12.4%Kazakhstan

Ukraine 6.2%

U.S.4.6%

Germany 4.7%

Others

Poland

Others19.1%

China59.3%

India8.6%

Russia5.8%

Japan5.3%

South Korea3.2%

Ukraine 2.8%

U.S. 1.9%

Germany 1.6%

Kazakhstan1.3%

Poland1.2%

Others8.9%

World total976.2 million tons

(Outer circle: Estimates for 2012)471.2 million tons



6

2.2 Production

Global coal production plunged on a demand decline mainly in the former Soviet Union in

the early 1990s and on a demand fall in China and Europe in the second half of the 1990s before

turning upward in response to robust demand growth after 2000. In 2012, coal production totaled

7,831 million tons (Figure 2-6).

A country-by-country breakdown shows that China’s production growth since 2003 is

remarkable. While annual global coal production increased by 2,908 million tons from 2002 to 2012,

China accounted for some 70% or 2,013 million tons of the increase (Figure 2-7). The United States,

the second largest coal producer after China, kept annual coal output almost unchanged from around

1.0 billion tons in 1997 before posting a decline in 2012 due to a domestic coal demand drop

attributable mainly to shale gas output. India, Australia and Indonesia have steadily expanded coal

output.


Source: IEA3)

Figure 2-6. Global Coal Production

3,7

87

3,8

20

3,9

72

4,0

09

4,2

09

4,3

80

4,4

87

4,5

96

4,6

89

4,7

69

4,6

68

4,5

01

4,4

51

4,3

42

4,4

17

4,5

71

4,6

37

4,6

36

4,5

82

4,5

10

4,6

49

4,8

71

4,9

23

5,2

73

5,6

68

6,0

11

6,3

30

6,5

59

6,7

44

6,8

38

7,2

10

7,6

08

7,8

31

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12*

Coa

l ou

tpu

t by c

ou

ntry

(millio

n to

ns)

Coa

l o

utp

ut (m

illio

n t

on

s)

Coal production China U.S. India Indonesia Australia Russia South Africa


7


Source: IEA3)

Figure 2-7. Coal Production (10 largest coal producing countries)

2.3 Trade

The ratio of coal trade (this study assumes trade as equal to exports) to global production

was limited to 16.0% in 2012, which is lower compared with other fossil fuels (Figure 2-8). But coal

trade has been expanding in line with an increase in demand for steam coal used mainly for power

generation. The trade ratio stands at 29.5% for coking coal, 16.2% for steam coal (including

anthracite) and 0.3% for lignite.

Coal producing countries are divided according to the production-export ratio into three

groups -- domestic consumption-oriented, export-oriented and intermediate countries. China and

India with respective small coal trade ratios of 0.3% and 0.2% are domestic consumption-oriented

countries, while Indonesia and Australia with respective high trade ratios of 86.4% and 71.7% are

export-oriented countries (Figure 2-9). In countries with high coal trade ratios, coal is positioned as

both an energy source for domestic consumption and a key export product.

(Million tons)

China 1,072.8 1,535.7 3,549.1 2,013.4

U.S. 905.0 992.7 934.9 ▲ 57.8

India 255.2 363.9 595.0 231.1

Indonesia 22.0 102.1 442.8 340.7

Australia 228.3 339.9 420.7 80.8

Russia 316.4 237.6 353.9 116.4

South Africa 174.4 220.2 259.3 39.1

Germany 314.0 211.0 197.0 ▲ 14.0

Poland 198.5 161.9 144.1 ▲ 17.8

Kazakhstan 126.5 74.0 126.0 52.0

Others 838.0 683.5 807.9 124.3

World total 4,451.1 4,922.6 7,830.8 2,908.2

Asia total 1,440.6 2,081.8 4,740.0 2,658.2

(Share in world

total)(32.4%) (42.3%) (60.5%)

2002-2012

growth1992 2002

2012

estimates

China31.2%

U.S.20.2%

India7.4%

Indonesia2.1%

Australia6.9%

Russia4.8%

South Africa4.5%

Germany4.3%

Poland

Kazakhstan

Others13.9%

China45.3%

U.S.11.9%

India7.6%

Indonesia5.7%

Australia5.4%

Russia4.5%

South Africa3.3%

Germany2.5%

Poland1.8%

Kazakhstan1.6%

Others10.3%


(Outer circle: Estimates for 2012)4,922.6 million tons

（Inner circle:Results

for 2002)


8

Note: Data for 2012 are estimates. Exports are deemed to be trade volume, with anthracite included in steam coal.

Trade within the former Soviet Union before 1990 is not counted. The coal trade ratio is computed according to

the following equation: Coal trade ratio (%) = Coal export ÷ Coal production

Source: IEA3)

Figure 2-8. Trends in World Coal Trade

Source: IEA3)

Figure 2-9. Major Coal Producing Countries (top 10 countries) and Major Coal Exporting

Countries' Output and Exports (estimates for 2012)

14

4

14

9

14

7

14

5

16

7

17

2

16

7

17

5

19

2

19

3

21

0

20

2

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3

18

6

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5

19

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19

4

19

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18

4

17

9

18

7

19

5

18

2

18

6

19

1

20

7

20

2

21

7

23

6

21

2

28

2

28

3

29

0

11

9

12

8

12

8

13

0

15

2

18

0

18

3

17

9

19

5

19

7

29

5

28

9

28

1

25

3

25

4

29

9

32

3

34

8

36

8

36

9

43

2

47

8

48

1

53

5

56

9

60

9

68

9

70

9

69

6

71

7

78

9

85

7

96

3

27

5

28

9

28

6

28

7

33

0

36

4

36

3

36

7

40

0

40

1 5

20

50

6

49

8

44

9

45

7

50

4

52

5

55

1

55

8

55

4

62

4

67

8

66

7

72

5

76

3

82

0 89

4

92

9

93

6

93

2

1,0

76

1,1

44

1,2

55

0

10

20

30

40

50

60

0

200

400

600

800

1,000

1,200

1,400

'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 2000 2002 2004 2006 2008 2010 2012*

Coa

l trad

e ra

tio (%

) C

oa

l tr

ad

e v

olu

me

(m

illio

n t

on

s)

Coking coal Steam coal

Brown coal Ratio of trade to production (all coal)

Ratio of trade to production (coking coal) Ratio of trade to production (steam coal)

Ratio of trade to production (brown coal)

10

114

1.5 383 302 134

74 0.4 7.1 32 82 35 22 19

0.3%

12.2%

0.2%86.4% 71.7% 37.9%

28.7% 0.2% 4.9% 25.3%91.9% 52.3% 65.6%45.3%

3,549

935

595 443 421 354 259 197 144 126

89 67 34 42

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Upper：Production

Middle：Exports

Lower：Coal trade ratio (=Coal exports ÷Coal production)

(Million tons)

Export volume out of production volume


9

Coal export trends

Coal exports in the world in 2012 totaled 1,255 million tons. Indonesia was the largest coal

exporter with exports at 383 million tons, followed by 302 million tons for Australia. The two

countries accounted for 54.5% of total exports in the world. Following Australia were Russia, the

United States, Colombia and South Africa. The six countries captured 86.7% of world total exports

(Figure 2-10).

Among major coal exporting countries, Australia was dominant until the first half of the

2000s. But Indonesia expanded coal exports remarkably from the early 2000s and replaced Australia

as the largest exporter in 2011 (Figure 2-11). Russia has steadily boosted coal exports since 1999.

The United States has increased coal exports since 2010 as domestic coal consumption has declined

due to a gas price fall amid a shale gas output expansion. China expanded exports sharply from 2000,

remaining the world’s second largest coal exporter between 2001 and 2003. Since 2004, however,

China has substantially reduced coal exports due to domestic demand growth. In 2012, China was

the 12th largest coal exporter with exports totaling 10.5 million tons (Figure 2-11).


Exports from Kazakhstan mostly go to Russia. Most of Mongolian exports are destined for China.

Source: IEA3)

Figure 2-10. Coal Exports (10 largest coal exporting countries)

(Million tons)

Indonesia 15.4 73.0 382.6 309.6

Australia 126.2 204.3 301.5 97.2

Russia 43.4 44.3 134.2 89.9

U.S. 93.0 35.9 114.1 78.1

Colombia 14.6 36.5 82.2 45.7

South Africa 52.1 69.2 74.3 5.1

Canada 28.2 26.9 34.8 7.9

Kazakhstan 42.5 27.1 31.9 4.8

Mongolia 0.1 0.0 22.1 22.1

Vietnam 1.6 6.0 19.1 13.0

Others 80.6 143.7 58.6 ▲ 85.1

World total 497.7 667.0 1,255.3 588.3

Asia total 41.2 165.3 449.2 283.9

(Share in world

total)(8.3%) (24.8%) (35.8%)

2002-2012

growth1992 2002

2012

estimates

Indonesia10.9%

Australia30.6%

Russia6.6%

U.S.5.4%

Colombia5.5%

South Africa10.4%

Canada4.0%

Kazakhstan4.1%

Vietnam0.9%

Others21.5%

Indonesia30.5%

Australia24.0%

Russia10.7%

U.S.9.1%

Colombia6.5%

South Africa5.9%

Canada2.8%

Kazakhstan2.5%

Mongolia1.8%

Vietnam1.5%

Others4.7%


(Outer circle: Estimates for 2012)

667 million tons (Inner circle:Results

for 2002)


10


Source: IEA3)

Figure 2-11. 12 Largest Coal Exporting Countries’ Export Volume Trends

Coal import trends

The largest coal importer in the world in 2012 was China with imports totaling 289 million

tons (accounting for 22.6% of total imports) (Figure 2-12), followed by Japan's 184 million tons

(14.4%), India's 160 million tons (12.5%), South Korea's 126 million tons (9.8%) and Taiwan's 65

million tons (5.1%). The four major Asian coal importers accounted for 662.6 million tons or 51.9%

of world total coal imports.

Among major coal importing countries, Japan had remained the world’s largest importer

for a long time. But China, which has seen rapid domestic coal demand growth since around 2004,

boosted imports mainly for its Southeastern coast region far away from coal production sites from

2009 and replaced Japan as the largest coal importer in the world in 2011 (Figure 2-13). Meanwhile,

Japan reduced coal imports due to a recession in 2009 and due to the Great East Japan Earthquake in

2011. In India, domestic coal production growth has failed to catch up with domestic demand growth.

India’s domestic coal features high ash content and is usually mixed with imported coal for burning.

Furthermore, India has begun to operate thermal power plants fueled only by imported coal. As a

result, India has expanded coal imports rapidly since 2008. South Korea’s coal imports have been

increasing as coal power generation and steelmaking capacity have been expanded.

0

50

100

150

200

250

300

350

400

'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12*

(Million tons)

Indonesia

Australia

Russia

U.S.

Colombia

South Africa

Canada

Kazakhstan

Mongolia

Vietnam

North Korea

China


11


Source: IEA3)

Figure 2-12 Coal Imports (10 largest coal importing countries)


Source: IEA3)

Figure 2-13. 10 Largest Coal Importers’ Import Trends

0

50

100

150

200

250

300

'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12*

(Million tons)

China

Japan

India

South Korea

Taiwan

Germany

U.K.

Russia

Turkey

Italy

(Million tons)

China 1.6 11.3 288.8 277.5

Japan 110.6 161.3 183.8 22.5

India 6.5 23.3 159.6 136.4

South Korea 30.8 71.7 125.5 53.8

Taiwan 22.1 51.8 64.5 12.7

Germany 19.1 33.5 45.2 11.7

U.K. 20.3 28.7 44.8 16.1

Russia 39.7 20.9 31.4 10.5

Turkey 5.4 11.7 28.7 17.0

Italy 17.8 19.2 24.3 5.1

Others 213.4 251.0 279.4 28.4

World total 487.4 684.3 1,276.0 591.8

Asia total 189.8 348.8 896.4 547.5

(Share in world

total)(38.9%) (51.0%) (70.2%)

2002-2012

growth1992 2002

2012

estimates

China1.6%

Japan23.6%

India3.4%

South Korea10.5%

Taiwan7.6%

Germany4.9%

U.K.4.2%Russia

3.0%

Turkey1.7%

Italy2.8%

Others36.7%

China22.6%

Japan14.4%

India12.5%

South Korea9.8%

Taiwan5.1%

Germany3.5%

U.K.3.5%

Russia2.5%

Turkey2.2%

Italy1.9%

Others21.9%

World total1,276 million tons

(Outer circle: Estimates for 2012)684.3 million tons



12

Coal trade flows

The world coal market is divided into two markets -- the Asia-Pacific market and the

Europe-Atlantic market. While the Europe-Atlantic market has leveled off, the Asia-Pacific market

including China and India has been expanding. In 2012, the Asia-Pacific market was four times as

large as the Europe-Atlantic market.

Figure 2-14 indicates coal trade flows. Generally, Indonesia and Australia provide massive

coal for the Asia-Pacific market. Major suppliers for the Europe-Atlantic market are Colombia,

Russia and the United States. South Africa has been shifting from the Europe-Atlantic coal market to

the Asia-Pacific market due to growing Russian, Colombian and U.S. supply in the Europe-Atlantic

market and India's coal import expansion.

Figure 2-15 indicates steam coal trade flows and Figure 2-16 coking coal trade flows.

Since steam coal trade accounts for nearly 80% of total coal trade (Figure 2-8), the steam coal trade

flows are not so different from the overall coal trade flows. China is the largest importer of both

steam and coking coal, importing 218 million tons in steam coal and 71 million tons in coking coal

in 2012.

Note: The figure covers flows of more than 2 milllion tons. North America includes Mexico in accordance with a

definition in IEA3). Blue or red numbers indicate that the figure increased or decreased from the previous year,

respectively.

Source: IEA3)

Figure 2-14 World Coal Trade Flows (estimated for 2012)

115.4Mt

Other Asian countries729.8Mt

OECDEurope237.2Mt

Other European countries53.4Mt

Latin America

34.5Mt

13.1Mt

8.0Mt

4.3Mt

161.5Mt333.8Mt

52.6Mt

7.3Mt

OECD Europe237.2Mt

4.1Mt

50.6Mt

50.8Mt

61.2Mt

17.4Mt

15.0Mt

9.9Mt

China10.5Mt

3.5Mt

12.8Mt

5.2Mt

South Africa75.1Mt

5.9Mt

10.0Mt

9.7Mt

11.2Mt

7.8Mt

10.4Mt

3.8Mt

11.1Mt

Indonesia382.5Mt

24.4Mt

Japan183.8Mt

18.2Mt

U.S.114.0Mt

4.6Mt

North America25.4Mt

35.2Mt

Australia301.5Mt

Exporters

3.6Mt

4.1Mt

Africa/Middle East

26.6Mt

Colombia82.2Mt

2.1Mt

41.0Mt

Canada34.7Mt

Russia134.2Mt

Importers


13

Note: Same as for Figure 2-14

Source: IEA3)

Figure 2-15 World Steam Coal Trade Flows (estimated for 2012)


Source: IEA3)

Figure 2-16 World Coking Coal Trade Flows (estimated for 2012)

86.8Mt


OECDEurope186.6Mt

Other European countries

41.3Mt

Latin America22.2Mt

24.1Mt

11.2Mt

3.8Mt

333.8Mt

52.6Mt

5.2Mt

OECD Europe186.6Mt

29.6Mt

50.1Mt

58.0Mt

2.4Mt

14.6Mt

9.8Mt

China8.7Mt

34.0Mt

5.7Mt

South Africa73.6Mt

5.9Mt

10.0Mt

9.6Mt

6.7Mt

7.7Mt

11.0Mt

9.1Mt

Africa/Middle East

24.3Mt

North America19.3Mt

2.8Mt

Colombia81.7Mt

Japan131.6Mt

3.4Mt

Indonesia382.4Mt

85.3Mt

Australia159.2Mt

Russia115.9Mt

3.4Mt

2.9Mt

U.S.50.6Mt

2.4Mt

Canada4.0Mt

0

28.7Mt


OECDEurope50.6Mt

Other European countries12.0Mt

Africa/Middle East2.3Mt

Latin America12.3Mt

North America6.1Mt

11.2Mt

1.9Mt

5.2Mt

76.2Mt

1.1Mt

2.1Mt

OECD Europe50.6Mt

21.0Mt

4.1Mt

3.2Mt

15.0Mt

3.0Mt

China1.7Mt

7.1Mt

Indonesia0.0Mt

1.2Mt

4.6Mt7.9Mt

3.5MtAustralia142.4Mt

Colombia0.5Mt

15.3Mt

Japan52.2Mt

16.5Mt

Russia18.3Mt

7.0Mt

South Africa1.5Mt

4.5Mt U.S.63.4Mt

Canada30.7Mt

1.0Mt

2.1Mt


14

3. Future Global Coal Supply/Demand Outlook

3.1 Estimation method and assumptions

Figure 3-1 indicates a framework for estimating coal supply/demand and trade flows for

this study. For forecasting industrial activities, energy prices and other social and economic

indicators that influence energy demand, we use a macroeconomic model that covers gross domestic

product, crude oil prices, materials output and other variables. Based on the forecast, we project coal

demand within an energy demand model. We divide coal into the three types of steam coal, coking

coal and lignite and take into account relevant indicators for these types in projecting demand. On

the other hand, we use various statistics and coal mine development projects for forecasting coal

supply. We project coal trade flows meeting supply and demand estimates by building and operating

a linear programming model.

Figure 3-1. Flow for Calculating Future Global Coal Supply/Demand

Energy demand model

Coal demand outlook

Coal supply outlook

Coal trade flow

Macroeconomicmodel

(Major assumptions)

GDP, crude oil prices, exchange rates, population,

electricity source plans,materials output, etc.

Steam coal

Coking coal

Lignite

(Relevant indicators)

Power generation, industrial activities

Pig iron/coke output

Power generation

(Major assumptions)

Various statistics,development projects,

experts' knowledge, etc.

Development projects,

capital conditions


15

3.1.1 Coal supply/demand forecasts

We estimated future coal supply and demand while reflecting and reconsidering up-to-date

coal information, based on “Asia/World Energy Outlook 20136)

” published in October 2013 by the

Institute of Energy Economics, Japan. Unlike the outlook, we estimated supply and demand each for

steam coal, coking coal and lignite. See the outlook for major assumptions for the macroeconomic

model and energy supply and demand forecasts other than coal.

3.1.2 Coal trade flow estimation

We built a linear programming (LP) model to develop coal trade flows that minimize coal

trade costs in the world while meeting projected coal supply and demand.

The LP model is a static model to divide the world into 26 countries and regions and

estimate coking and steam coal trade flows between regions (Figure 3-2). We treat coal trade costs as

an objective function and minimized them under a linear constraints system. We must note that the

LP model views the entire world as an agent and minimizes the total cost for computation. Attention

should be paid to the point that trade decisions based on partial optimization cannot be made in this

model.

Figure 3-2. Regions Subjected to LP Model

The total cost as the objective function consist of the coal terminal construction costs, the

coal production costs (represented by market prices) and the costs for transportation between

terminals.

・U.S.

・Canada

North America

・Australia

・New Zealand

Oceania

・South Africa

・Other Africa

Africa

Middle East

・Japan・China ・India

・Taiwan・South Korea・Hong Kong

・Indonesia・Malaysia

・Philippines・Thailand・Vietnam

・Singapore・Brunei

・Other Asia

OECD Europe

・Russia

・Other FSU ・Non-OECD Europe

Non-OECD Europe/Central Asia

・Colombia

・Other Latin

America

Latin America

Asia


16

We set the representative coal terminal construction cost at $915,000 per 10,000 tons

($1,830 million for a terminal with annual capacity at 20 million tons). For each country and region,

we computed the cost while taking into account the regional average price and wage levels along

with the representative cost. We assumed the same unit cost for steam coal and coking coal. We put

the payback period at 15 years.

As for the coal production cost (represented by market prices), we set the standard price

at $110/ton for coking coal and $80/ton for steam coal (2012 prices). For each country and region,

we computed the coal production cost while taking into account the regional average price and wage

levels along with the standard price. We used a steam coal price hike assumed for “Asia/World

Energy Outlook 2013” to set the standard price for 2025 and 2040.

We used Worldscale7)

to compute the cost of transportation between countries/regions.

Each country or region was represented by one terminal. We quoted distances between terminals

from Worldscale. But North America, Russia and other countries and regions where large distances

exist between eastern and western terminals were each represented by multiple terminals.

3.2 Results and discussion

3.2.1 Coal demand outlook

Coal demand will continue to increase in line with the economic growth of developing

countries. It will rise from 7,527 million tons in 2011 to 8,671 million tons in 2025 and 10,020

million tons in 2040. The annual average growth rate through 2040 will be 1.0% (Figure 3-3).

By coal type, steam coal demand growth will be overwhelming. The growth will be

attributable to growing electricity demand, as detailed later. Steam coal demand will expand from

5,677 million tons in 2011 to 6,723 million tons in 2025 and 8,095 million tons in 2040. In contrast,

coking coal demand, though rising from 936 million tons in 2011 to 1,035 million tons in 2020, will

turn down later in line with a drop in China’s steel production. So far, China’s crude steel production

has rapidly expanded in an overheated manner (Figure 3-4). But it may peak around 2020 and turn

down later. As a result, global coking coal demand in 2040 will slightly increase from 2011. This

means that steam coal will account for almost all of the 2,494 million ton increase in coal demand

from 2011 to 2040 (Figure 3-5 (a)).

Demand for coal for power generation will expand rapidly as electricity demand increases

in line with the economic growth in non-OECD countries including Asian countries. Power

generation coal demand will increase from 4,774 million tons in 2011 to 6,984 million tons in 2040

(with the annual average growth rate at 1.3%). Industrial coal demand will rise from 961 million tons

in 2011 to 1,139 million tons in 2040. Power generation and industrial coal demand will thus

account for 96% of the overall coal demand increase (Figure 3-5 (b)).


17

Sources: Past results are from IEA1), 2) , with forecasts based on the IEEJ outlook6).

Figure 3-3. Global Coal Demand

Sources: Results are from the Iron & Steel Statistics Handbook8) , with forecasts based on the IEEJ outlook6).

Figure 3-4. China’s Crude Steel Production

0

2,000

4,000

6,000

8,000

10,000

12,000

1990 2000 2011 2020 2025 2040

Results Forecasts

4,664 4,762

7,527

8,2808,671

10,020

Million tons

0

200

400

600

800

1,000

1990 2000 2005 2011 2020 2025 2040

Results Forecasts

65

129

356

702

840

687

Million tons

819


18

(a). By coal type (b). By use

Figure 3-5. Breakdown of Coal Demand Growth (2011-2040)

Region-by-region coal demand is given in Table 3-1.

In Asia where coal demand has expanded rapidly since 2000, demand will continue

increasing. Asian coal demand will rise from 4,810 million tons in 2011 to 5,974 million tons in

2025 and 7,273 million tons in 2040. Asia’s share of global demand will rise from 63.9% in 2011 to

72.6% in 2040. Among Asian countries, India and ASEAN members will continue boosting coal

demand. On the other hand, China will moderate coal demand growth after a rapid expansion during

the 2000s and reach a demand peak before 2040.

In North America and OECD Europe, coal demand will decrease as gas and renewable

energy power generation expands in response to environmental concerns including air pollution and

carbon dioxide emissions. North American coal demand will fall from 963 million tons in 2011 to

832 million tons in 2025 and 740 million tons in 2040. Its share of global demand will decline from

12.8% in 2011 to 7.7% in 2040. Coal demand in OECD Europe will drop from 793 million tons in

2011 to 687 million tons in 2040, with its share of global demand shrinking from 10.5% to 6.9%.

In non-OECD Europe (including former Soviet Union), coal demand plunged in the early

1990s before increasing again in line with an economic recovery from the late 1990s. While Russian

coal demand will decline from around 2025, power generation coal demand will increase in

Kazakhstan and some other countries. As a result, coal demand in the entire non-OECD Europe will

post firm growth through 2040.

In Africa and the Middle East as well, coal demand will expand with coal-fired thermal

power plants being constructed.

Regions’ shares of global coal demand growth indicate that Asia will account for almost all

of the global demand increase between 2011 and 2040 (Figure 3-6).

Steam coal

97%

Coking coal 2% Lignite 1%

Power generation

89%

Industrial use 7% Others 4%


19

Table 3-1. Projected Coal Demand by Region

Sources: Past results are from IEA1), 2) , with forecasts based on the IEEJ outlook6).

Figure 3-6. Coal Demand Increase by Region (2011-2040)

3.2.2 Coal production outlook

Major coal producing countries are planning to develop coal mines and transportation

infrastructure (shipment ports and railways). But actual production depends on demand (domestic

demand and international markets), with demand affecting progress in production plans. In

estimating production, therefore, we took into account domestic (or regional) demand and coal

industry conditions, and for coal exporting countries international market conditions (export

demand) and coal development plans.

2,463

-188

80

-106

113

117

-100

33

2,494

Asia

North America

Non-OECD Europe

OECD Europe

Africa

Latin America

Oceania

Middle East

World total

(Million tons)

(Million tons)

1980 1990 2000 2011 2020 2025 … 2040 11/00 25/11 40/25 40/11

3,756 4,664 4,762 7,527 8,280 8,671 … 10,020 4.3% 1.0% 1.0% 1.0%

687 865 1,029 963 859 832 … 775 -0.6% -1.0% -0.5% -0.7%

650 816 966 920 815 793 … 740 -0.4% -1.1% -0.5% -0.7%

19 33 44 63 96 115 … 180 3.3% 4.5% 3.0% 3.7%

913 1,544 2,077 4,810 5,597 5,974 … 7,273 7.9% 1.6% 1.3% 1.4%

626 1,050 1,338 3,501 3,928 4,011 … 4,173 9.1% 1.0% 0.3% 0.6%

108 221 357 710 963 1,189 … 2,068 6.5% 3.7% 3.8% 3.8%

88 115 153 174 168 165 … 150 1.2% -0.4% -0.7% -0.5%

28 45 72 131 139 146 … 150 5.6% 0.8% 0.2% 0.5%

2 5 13 16 23 28 … 49 2.0% 3.9% 3.9% 3.9%

1,158 1,182 831 793 743 726 … 687 -0.4% -0.6% -0.4% -0.5%

814 800 467 545 587 606 … 625 1.4% 0.8% 0.2% 0.5%

- 374 230 225 236 233 … 213 -0.2% 0.3% -0.6% -0.2%

- 56 31 66 81 91 … 109 7.0% 2.4% 1.2% 1.8%

93 136 170 200 232 250 … 312 1.5% 1.6% 1.5% 1.6%

69 98 130 137 143 141 … 119 0.4% 0.2% -1.1% -0.5%

OECD Europe

Non-OECD Europe

Russia

Kazakhstan

Africa

Oceania

Asia

China

India

Japan

South Korea

Middle East

Annual average growth (%)

World total

North America

U.S.

Latin America


20

Tables 3-2, 3-3 and 3-4 indicate region-by-region (country-by-country) coal production by

coal type. Future coal production trends in North America and OECD Europe will be far different

from those in Asia and non-OECD countries where coal demand will increase.

In North America, Canada will expand coal production as a coal exporting country. But the

United States will reduce coal production due mainly to a decline in domestic demand, an increase in

production costs and coal mining operations’ adverse effects on the environment. As a result, North

American coal production will decrease at an annual average rate of 0.6% from 2011 to 2040. Major

coal producing regions in the United States include Appalachia, the Powder River Basin and Illinois.

Production is expected to decline in Appalachia plagued with low productivity and to keep the

present level in the Power River Basin featuring higher productivity and lower costs. In OECD

Europe, coal production will fall at an annual average rate of 0.6% due primarily to a demand

decline, a production cost hike and the abolition of coal industry subsidies in several countries.

Unlike North America and OECD Europe where production will decline, Asian coal

producing countries will expand production in line with their own demand growth. Asian coal

production will rise at an annual average rate of 1.3% between 2011 and 2040.

Indonesia has substantially increased its coal production in response to the expansion of

the Asian market. Its production will steadily rise from 360 million tons in 2011 to 650 million tons

in 2040, with the annual average growth rate standing at 2.0%. But the Indonesian government has

adopted a policy to sustainably and efficiently use domestic coal resources for national interests,

adjusting the coal production expansion to domestic demand growth. As a result, Indonesia’s coal

exports will level off from around 2020 and begin to decline around 2025. India will boost its coal

production at an annual average rate of 3.7% from 2011 and 2040 in line with growing domestic

demand. Its coal output in 2040 will reach 1,633 million tons. But its domestic output may fall short

of covering all domestic demand. India will depend on imports to meet the domestic

production-demand gap. China is the world’s largest coal consumer, producer and importer. China’s

coal output will increase through the mid-2030s to meet growing domestic demand and will later

decrease in line with a demand drop. Other Asian countries will expand coal output according to

their own demand growth. Among them, Mongolia will increase coal output in accordance with

exports to China.

Other non-OECD countries will expand coal production in response to domestic and

regional demand growth. In Africa, South Africa’s steam coal production and Mozambique’s coking

coal output will increase in line with the expansion of the Asian coal market. (Mozambique will

boost steam coal output as well as coking coal production.) Colombia will boost steam coal output to

meet demand growth in other Latin American countries, although the European market as its largest

market will shrink, with U.S. imports decreasing.


21

Australia’s coal production in 2040 will more than double from 2011 to respond to the

expansion of the international coal market. Particularly, its steam coal output will more than triple

from 2011 due to a sharp market expansion.

Table 3-2. Projected Coal Production by Region

Sources: Past results are from IEA3) , with forecasts based on the IEEJ outlook6).

Table 3-3. Projected Steam Coal Production by Region


(Million tons) Annual average growth (%)

1980 1990 2000 2011 2020 2025 … 2040 11/00 25/11 40/25 40/11

World total 3,781 4,624 4,598 7,452 8,280 8,671 … 10,020 4.5% 1.1% 1.0% 1.0%

North America 790 1,002 1,041 1,060 973 954 … 896 0.2% -0.7% -0.4% -0.6%

U.S. 753 934 972 992 903 886 … 824 0.2% -0.8% -0.5% -0.6%

Canada 37 68 69 67 70 69 … 72 -0.3% 0.2% 0.4% 0.3%

Latin America 20 48 75 122 118 126 … 155 4.5% 0.2% 1.4% 0.8%

Colombia 4 21 38 86 86 90 … 112 7.6% 0.3% 1.5% 0.9%

Asia 827 1,325 1,791 4,373 5,101 5,401 … 6,402 8.5% 1.5% 1.1% 1.3%

China 620 995 1,301 3,280 3,665 3,733 … 3,900 8.8% 0.9% 0.3% 0.6%

India 110 219 329 575 750 929 … 1,633 5.2% 3.5% 3.8% 3.7%

Indonesia 0 10 79 360 531 559 … 647 14.7% 3.2% 1.0% 2.0%

Middle East 1 1 2 1 1 1 … 1 -0.5% -1.6% -0.2% -0.9%

OECD Europe 1,093 1,045 652 581 541 525 … 492 -1.0% -0.7% -0.4% -0.6%

Non-OECD Europe 824 813 496 649 716 739 … 764 2.5% 0.9% 0.2% 0.6%

Russia - 372 240 322 362 363 … 348 2.7% 0.9% -0.3% 0.3%

Africa 120 182 230 258 334 364 … 442 1.0% 2.5% 1.3% 1.9%

South Africa 115 175 224 253 292 311 … 373 1.1% 1.5% 1.2% 1.4%

Oceania 107 207 310 407 496 560 … 869 2.5% 2.3% 3.0% 2.6%

Australia 105 205 307 402 491 555 … 863 2.5% 2.3% 3.0% 2.7%


1980 1990 2000 2011 2020 2025 … 2040 11/00 25/11 40/25 40/11

World total 2,258 2,874 3,254 5,559 6,331 6,723 … 8,095 5.0% 1.4% 1.2% 1.3%

North America 609 792 869 865 785 774 … 730 0.0% -0.8% -0.4% -0.6%

U.S. 592 760 840 837 757 747 … 704 0.0% -0.8% -0.4% -0.6%

Canada 17 31 30 28 29 27 … 26 -0.6% -0.3% -0.2% -0.2%

Latin America 7 30 58 102 106 113 … 140 5.2% 0.7% 1.5% 1.1%

Colombia 3 20 36 82 82 87 … 108 7.6% 0.4% 1.5% 1.0%

Asia 719 1,167 1,597 3,721 4,409 4,713 … 5,709 8.0% 1.7% 1.3% 1.5%

China 552 909 1,178 2,771 3,114 3,219 … 3,491 8.1% 1.1% 0.5% 0.8%

India 87 169 283 488 639 797 … 1,401 5.1% 3.6% 3.8% 3.7%

Indonesia 0 10 79 358 525 551 … 633 14.7% 3.1% 0.9% 2.0%

Middle East 0 0 0 0 0 0 … 0 -6.8% 0.0% 0.0% 0.0%

OECD Europe 365 279 161 103 91 82 … 72 -4.0% -1.6% -0.8% -1.2%

Non-OECD Europe 416 337 204 324 368 383 … 414 4.3% 1.2% 0.5% 0.9%

Russia - 152 102 180 197 195 … 185 5.3% 0.6% -0.4% 0.1%

Africa 108 172 226 256 308 335 … 406 1.1% 1.9% 1.3% 1.6%

South Africa 105 165 221 251 290 309 … 371 1.2% 1.5% 1.2% 1.4%

Oceania 33 96 138 187 264 322 … 623 2.8% 4.0% 4.5% 4.2%

Australia 32 94 136 185 262 320 … 620 2.8% 4.0% 4.5% 4.3%


22

Table 3-4. Projected Coking Coal Production by Region


3.2.3 Coal trade flows

We used the LP model to estimate steam and coking coal trade flows in 2025 and 2040. In

forecasting trade flows, we took into account planned production deals and capital injection

conditions as well as projected coal demand and production.

Steam coal

Steam coal trade volume and flows are given in Tables 3-5 and 3-6 and Figures 3-7 and

3-8. Steam coal trade will expand from 857 million tons in 2011 to 1,108 million tons in 2025 and

1,417 million tons in 2040. For OECD Europe where steam coal demand will decline due to

environmental concerns and other issues, major coal exporters have so far included Russia,

Colombia, the United States and South Africa. Of them, Colombia will reduce coal exports to

Europe. This does not necessarily mean any relative decline in Colombia’s competitiveness in the

market for Europe. But this does indicate that Colombia’s exports to other Latin American countries

with growing coal demand would cost less than those to Europe. South Africa and Mozambique will

expand exports to other African countries, India and the Middle East where demand will increase.

While Russian coal exports will level off from 2025 to 2040, Russia will reduce exports to Europe

while expanding those to Asia.

In the Asian market, Indonesia’s exports will peak around 2025 and gradually decline later

due to its domestic demand growth and its policy of making effective use of coal resources. As a

result, Australia will greatly expand exports to meet growing Asian demand. Australia’s exports in

2025 will expand 1.5-fold from 2011. Those in 2040 will score a more than 2.5-fold increase from

2011. In fact, India and China have invested in new coal mine development projects in Australia and

will expand imports from mines subject to these projects.


1980 1990 2000 2011 2020 2025 … 2040 11/00 25/11 40/25 40/11

World total 567 610 488 982 1,035 1,027 … 976 6.6% 0.3% -0.3% 0.0%

North America 132 121 82 111 106 103 … 94 2.7% -0.5% -0.6% -0.6%

U.S. 118 93 54 82 77 72 … 60 3.8% -0.9% -1.2% -1.0%

Canada 14 28 28 29 29 30 … 34 0.4% 0.1% 0.8% 0.5%

Latin America 12 16 15 18 5 6 … 7 2.0% -7.9% 1.1% -3.4%

Colombia 1 2 2 4 3 3 … 4 7.4% -1.0% 1.1% 0.1%

Asia 97 124 146 578 619 601 … 534 13.3% 0.3% -0.8% -0.3%

China 68 86 123 509 541 514 … 409 13.8% 0.1% -1.5% -0.8%

India 18 36 22 44 51 59 … 86 6.5% 2.1% 2.5% 2.3%

Indonesia 0 0 1 3 6 8 … 14 14.9% 7.9% 3.7% 5.7%

Middle East 1 1 1 1 1 1 … 1 0.0% 0.6% -0.2% 0.2%

OECD Europe 128 93 45 25 18 14 … 3 -5.1% -4.3% -9.7% -7.1%

Non-OECD Europe 145 180 90 98 109 115 … 126 0.8% 1.2% 0.6% 0.9%

Russia - 85 51 65 80 86 … 98 2.3% 2.0% 0.9% 1.4%

Africa 12 10 4 2 21 24 … 30 -4.9% 18.2% 1.5% 9.3%

South Africa 11 9 3 2 2 2 … 2 -5.9% 1.1% 1.0% 1.0%

Oceania 40 65 105 149 157 164 … 181 3.2% 0.7% 0.7% 0.7%

Australia 40 65 104 147 155 162 … 179 3.2% 0.7% 0.7% 0.7%


23

Table 3-5. Steam Coal Trade (2025)

Note: “Others” includes Latin American countries other than Colombia, and non-OECD European countries other

than Russia. “Other Asian countries” on the export side includes Mongolia and Vietnam.

Note: The figure covers flows of more than 2 million tons. The legend in the figure is the same as in Figure 2-14.

Mexico is included in Latin America.

Figure 3-7. Steam Coal Trade Flows (2025)

U.S. 5.3 2.4 30.9 0.6 3.1 1.8 0.8 45.0

Canada 1.2 2.1 0.3 1.4 5.0

Colombia 5.0 40.3 32.8 0.7 1.5 1.0 81.3

Russia 60.7 5.5 7.2 14.5 20.2 14.2 122.3

South Africa 13.6 10.2 3.0 0.6 13.0 39.7 7.0 2.2 89.3

Mozambique 0.1 12.7 12.8

China 2.6 5.7 8.3

Indonesia 5.0 14.0 27.6 100.2 106.9 68.0 83.9 405.7

Australia 1.9 15.0 3.0 61.3 31.7 42.5 57.6 45.9 258.9

Other Asian countries 0.0 0.0 0.8 1.1 39.0 3.5 1.5 0.1 46.0

Others 0.8 7.2 25.6 33.7

13.0 57.7 151.5 10.3 25.5 33.6 111.1 209.0 207.1 157.2 132.1 1,108

(Million tons)

To

North

America

Latin

America

OECD

EuropeAfrica

Middle

East

Non-OECD

Europe Japan China IndiaSouth Korea

・Taiw an

Other Asian

countries

Fro

m

14.5Mt

North America

13.0Mt

OECD Europe151.5Mt

Non-OECD Europe33.6Mt

Japan111.1Mt

Latin America 57.7Mt

China209.0Mt

14.2Mt 2.1Mt

2.6Mt

61.3Mt57.6Mt

68.0Mt

3.1Mt

20.2Mt

13.0Mt

100.2Mt

39.0Mt

5.7Mt

39.7Mt

12.7Mt 106.9Mt


3.5Mt

China8.3Mt

31.7Mt

42.5Mt

83.9Mt

45.9Mt2.2Mt

OECD Europe

151.5Mt

30.9Mt

27.6Mt

32.8Mt

60.7Mt

13.6Mt

Africa10.3Mt

5.0Mt

South Korea/Taiwan

157.2Mt3.0Mt

7.2Mt

40.3Mt2.4Mt

15.0Mt

5.0Mt

5.3Mt

Canada5.0Mt

U.S.45.0Mt

Colombia81.3Mt

Australia258.9Mt

India207.1Mt

Russia122.3Mt

Indonesia405.7Mt

Middle East25.5Mt 14.0Mt

5.5Mt


10.2Mt

3.0Mt

Mozambique12.8Mt

South Africa89.3Mt

7.0Mt


24

Table 3-6. Steam Coal Trade (2040)


than Russia. “Other Asian countries” on the export side includes Mongolia and Vietnam.

Note: Same as for Figure 3-7.

Figure 3-8. Steam Coal Trade Flows (2040)

U.S. 4.8 9.9 21.5 0.6 3.0 2.8 0.8 43.4

Canada 2.5 2.1 0.3 1.4 6.3

Colombia 5.2 58.1 29.3 5.0 0.6 1.5 1.0 100.8

Russia 52.0 10.8 8.8 12.5 22.2 17.7 123.9

South Africa 10.0 12.2 15.7 0.6 13.0 44.3 7.0 5.2 108.0

Mozambique 0.1 1.7 10.0 11.8

China 2.8 5.7 8.5

Indonesia 3.5 5.0 25.0 84.7 98.4 58.3 90.3 365.2

Australia 40.0 13.0 59.5 51.8 196.1 58.8 150.0 569.2

Other Asian countries 0.8 0.9 32.5 3.3 1.4 38.9

Others 19.0 22.2 41.2

10.1 108.0 137.8 17.3 46.2 31.8 104.6 209.0 354.9 152.1 245.5 1,417

(Million tons)

To

North

America

Latin

America

OECD

EuropeAfrica

Middle

East

Non-OECD


・Taiw an

Other Asian

countries

Fro

m

12.5Mt

North America

10.1Mt

OECD Europe137.8Mt


Japan104.6Mt

Latin America 108.0Mt

China209.0Mt

17.7Mt 2.1Mt

2.8Mt

59.5Mt59.6Mt

58.3Mt

3.0Mt

22.2Mt

13.0Mt

83.2Mt

32.5Mt

5.7Mt2.8Mt

44.3Mt

10.0Mt 98.4Mt

Other Asian countries

245.5Mt

3.3Mt

China8.5Mt

51.8Mt

196.1Mt

90.3Mt

150.0Mt

5.2Mt

OECD Europe

137.8Mt

21.5Mt

25.0Mt

29.3Mt

52.0Mt

10.0Mt

Africa17.3Mt

5.0Mt

South Korea/Taiwan

152.1Mt

Middle East

46.2Mt

12.2Mt

3.5Mt

5.0Mt


38.9Mt

8.8Mt

5.0Mt

5.0Mt

58.1Mt9.9Mt

40.0Mt

5.2Mt

4.8Mt

Canada6.3Mt

U.S.43.4Mt

Colombia100.8Mt

Australia569.2Mt

India354.9Mt

10.8Mt

Russia123.9Mt

15.7Mt

13.0Mt

South Africa108.0Mt

7.0Mt

Indonesia365.2Mt

Mozambique11.8Mt


25

Coking coal

Coking coal trade volume and flows are given in Tables 3-7 and 3-8 and Figures 3-9 and

3-10. Coking coal trade volume will increase from 283 million tons in 2011 to 325 million tons in

2025 and 357 million tons in 2040.

From 2011 to 2025, China and India will expand coking coal imports due to their growing

demand. In response, Russia, Mozambique and Australia will expand output. Russia and Australia

will increase coking coal exports to China, while Mozambique will expand those to India.

Mozambique, a new coking coal exporter, will export to Latin America (Brazil) and Japan as well as

India. Indonesia will develop coking coal in Central Kalimantan for exports to other Asian countries

including Japan.

From 2025 to 2040, China will reduce coking coal imports in line with a fall in demand.

But India will continue increasing imports. Given an increase in Mongolian exports to China and a

decline in Japanese demand, Australia’s exports to China and Japan will decrease. As a result,

Australia’s exports to India will expand remarkably.

Table 3-7. Coking Coal Trade (2025)


than Russia.

U.S. 3.6 5.3 27.0 4.0 6.0 5.0 6.0 56.8

Canada 1.0 4.8 6.6 9.5 8.0 30.0

Colombia 0.6 0.6

Russia 3.0 11.1 2.0 6.0 3.0 25.1

South Africa 0.3 0.3

Mozambique 3.0 2.0 2.1 1.0 1.9 2.0 1.3 7.0 2.0 22.3

China 0.5 1.0 1.5

Indonesia 2.0 0.5 2.0 1.0 1.9 7.3

Australia 5.3 15.0 2.9 37.0 33.4 38.8 23.5 3.2 159.0

Mongolia 20.4 20.4

Others 1.5 1.5

4.6 14.3 51.8 5.2 1.0 14.5 54.1 77.0 52.8 44.5 5.1 324.8

(Million tons)

To

TotalNorth

America

Latin

America

OECD

EuropeAfrica

Middle

East

Non-OECD


・Taiw an

Other Asian

countries

Fro

m


26


Figure 3-9. Coking Coal Trade Flows (2025)

Table 3-8. Coking Coal Trade (2040)


than Russia.

U.S. 3.1 6.0 21.7 2.8 4.2 5.7 5.2 48.6

Canada 1.0 1.8 8.8 4.5 7.5 2.0 8.0 33.6

Colombia 0.4 0.4

Russia 3.0 15.3 2.0 5.0 3.0 28.3

South Africa 0.2 0.2

Mozambique 3.8 3.8 2.1 2.0 0.0 3.0 0.5 15.1 2.5 32.8

China 0.4 0.9 1.3

Indonesia 1.8 4.4 1.5 3.7 11.4

Australia 5.9 20.0 4.4 0.0 0.0 30.7 31.6 52.9 23.0 7.6 176.0

Mongolia 23.2 23.2

Others 0.5 0.6 1.1

4.1 18.4 57.3 6.8 2.0 16.0 45.2 72.0 80.0 44.1 11.3 356.9

(Million tons)

To

North

America

Latin

America

OECD

EuropeAfrica

Middle

East

Non-OECD


・Taiw an

Other Asian

countries

Fro

m

2.0Mt

North America

4.6Mt

OECD Europe

51.8Mt


Latin America

14.3Mt

China77.0Mt

3.0Mt

6.6Mt

37.0Mt23.5Mt

6.0Mt

6.0Mt

20.4Mt

7.0Mt


5.1Mt

33.4Mt38.8Mt

3.2Mt

OECD Europe

51.8Mt

27.0Mt

2.0Mt

3.0Mt

South Korea/Taiwan

44.5Mt

2.1Mt


20.4Mt

11.1Mt

5.3Mt

5.3Mt

3.6Mt

Colombia0.6Mt

South Africa0.3Mt

Russia25.1Mt

3.0Mt3.0Mt

4.8Mt

2.0MtMiddle East

1.0Mt

India 52.8Mt

15.0Mt

2.9Mt

Africa5.2Mt

4.5Mt

6.0Mt5.0Mt

6.0Mt

Canada30.0Mt

U.S.56.8Mt

Japan54.1Mt

2.0Mt

9.5Mt

2.0Mt

2.0Mt

Mozambique22.3Mt

China1.5Mt

Indonesia7.3Mt

2.0Mt

Australia159.0Mt


27


Figure 3-10. Coking Coal Trade Flows (2040)

4. Conclusion

In this paper, we detailed past coal supply and demand results by coal type and by region

and forecast coal supply and demand through 2040. Furthermore, we built a coal trade model using

the linear programming method, forecasting coal trade flows in 2025 and 2040.

In contrast to growing concerns about climate change, global coal consumption has

continued expanding. Particularly from 2002 to 2012, global coal demand grew at a very high annual

average rate of 4.6% centering on steam coal for power generation, driven by Asia. This trend will

continue through 2040, with the demand growth center shifting from China to India. Many OECD

countries will reduce coal demand, while China’s demand will peak out. As a result, global coal

demand’s annual average growth through 2040 will slow down to 1.0%. But power generation steam

coal demand will continue expanding. The coal demand increase projected through 2040 will rival

the rise in the decade between 2002 and 2012.

It will be difficult for most of countries to cover demand growth with domestic production

alone. As a result, international coal trade will expand. Total trade will grow by 65% between 2011

and 2040. Given that demand changes differ from region to region, future trade flows will be

2.0Mt

North America

4.1Mt

OECD Europe

57.3Mt

Non-OECD Europe

15.9Mt

Latin America

18.4Mt

China72.0Mt

3.0Mt4.5Mt

30.7Mt23.0Mt

5.0Mt

23.2Mt

15.1Mt


31.6Mt

52.9Mt

7.6Mt

OECD Europe

57.3Mt

21.7Mt

3.0Mt

South Korea/Taiwan

44.1Mt

2.1Mt


23.2Mt

15.3Mt

6.0Mt

5.9Mt

3.1Mt

Colombia0.4Mt

South Africa0.2Mt

Russia28.3Mt

3.8Mt3.8Mt

8.8Mt

3.8Mt Middle East

2.0Mt

India 80.0Mt

20.0Mt

4.4Mt

Africa6.8Mt

2.8Mt

5.2Mt5.0Mt

8.0Mt

U.S.48.6Mt

12.5Mt

2.5Mt

5.7Mt

China1.3Mt

3.0Mt

Australia176.0Mt

2.0Mt

7.5Mt

Japan45.2Mt

2.0Mt 4.4Mt

Mozambique32.7Mt

Canada33.6Mt

3.7Mt

Indonesia11.4Mt


28

different from the present ones. New major coal flows will emerge, including those from

Mozambique to India, from Russia to Asia, and from Colombia to other Latin American countries.

Meanwhile, Indonesia, now one of the major coal exporters, will refrain from expanding exports so

much due to domestic demand growth and its policy of protecting coal resources for their effective

use.

The coal trade model we have developed in this study separates steam coal from coking

coal and uses the linear programming method to estimate trade flows that can minimize the total

global trade cost. Therefore, we cannot take into account partial optimization for certain countries or

regions, or selection based on quality differences. Nevertheless, the model indicates a picture of

quantitative world coal trade while securing trade flows’ consistency with supply and demand. This

is one of this study’s features.

Projected trade flows indicate that demand growth in China and India and policy shifts in

coal producing countries may bring about a decline in coal imports into Japan from Australia (steam

coal), Indonesia (coking coal) and other major traditional coal exporters for Japan as well as a

decline in these countries’ shares of total coal imports into Japan, while new exporters (including

Mozambique with coking coal) for Japan may emerge. We hope that this study will help trigger

efforts to reaffirm the potential strong impacts of other countries’ supply and demand trends on trade

flows for Japan and other importing countries, or to consider how best to secure stable coal supply

for the future.

Reference

1) IEA, “Energy Balances of OECD Countries 2013” (2013)

2) IEA, “Energy Balances of Non-OECD Countries 2013” (2013)

3) IEA, “Coal Information 2013" (2013)

4) IEA, “Energy Statistics of OECD countries 2013" (2013)

5) IEA, “Energy Statistics of Non-OECD countries 2013" (2013)

6) Institute of Energy Economics, Japan, “Asia/World Energy Outlook 2013” (2013)

7) Worldscale Association, “NEW WORLDWIDE TANKER NOMINAL FREIGHT SCALE

“WORLDSCALE” (2013)

8) Japan Iron and Steel Federation, “Iron & Steel Statistics Handbook”


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Long-term Trends and Outlook for Global Coal Supply and Demand · Long-term Trends and Outlook for Global Coal Supply and Demand Yasuaki Kawakami1, ... in 1989, fluctuated in the

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