Coal may become a scarce commodity

The idea of ​​coal as a scarce commodity seems somewhat ridiculous, given that it remains one of the most abundant minerals on the planet, but in the coming years there may be a shortage of supplies in the maritime markets.

The current debate over coal tends to be about how long it will continue to play an important role in the global energy balance before it is replaced by cleaner alternatives, mainly renewable energy sources such as wind and solar.

While various analysts will disagree on how quickly this process will proceed, the reality is that coal, especially in Asia, will remain the backbone of energy supply for at least the next decade.

With the exception of India, most of Asia's major coal importers have increased their purchases this year, with China's top buyer increasing imports by 13.7 percent in the first nine months of the year compared to the same period in 2016.

This demand pushed up the price of Asian energy prices, and the Newcastle Index returned to levels close to USD 100 per tonne. In a normal market, higher prices will increase supply to meet additional demand, but the dynamics in thermal coal have changed.

In 2017, the global maritime market will have a supply deficit of 22.7 million tonnes, Rodrigo Echeverri, head of thermal coal at Noble Resources, said at a conference of leaders of global coal companies this week in Barcelona.

While the rise in United States exports may address some of the shortcomings, the supply deficit is expected to continue in 2018, meaning Newcastle prices must remain above $ 80 /t to stimulate US supplies.

The problem with global coal markets is that despite the rhetoric of countries trying to reduce coal consumption, it is actually growing. In the first nine months of the year, thermal energy production in China grew by 6.3 percent, prompting the world's leading coal importer to increase its purchases from the offshore market.

A further problem is that it has become more difficult for the traditional exporters of Australia, Indonesia and South Africa to meet the additional demand.