econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 24 June 2016

Coal's Terrible, No Good, Worst Year Ever

by Robert Rapier, Investing Daily

Investing Daily Article of the Week

The recently released BP Statistical Review of World Energy registered new all-time highs for the production and consumption of oil and natural gas, and for fossil fuels as a whole. But the story for coal was much different. In fact, 2015 brought the biggest drop in coal demand since 1965, the first year the BP Review began tracking energy statistics.

How bad was 2015 for the coal industry? Since 1965, annual coal demand has only declined by more than 50 million metric tons of oil equivalent (MMtoe) twice. Following the global financial crisis demand fell by just over 50 MMtoe in 2009, and then last year it tumbled by 71.3 MMtoe.

160621TELcoaldemand

Following the 2009 decline, coal demand growth returned to the robust rates of 2003-2007. But is that pattern likely to repeat this time? Let's take a closer look at the global coal market.

China has long been the world's largest producer and consumer of coal. In 2015, its 1,920 MMtoe of coal consumption accounted for half the global total. China's coal consumption grew for 15 straight years until 2014, increasing even during the 2008 financial crisis.

But now Chinese coal demand has declined for two straight years. The 29 MMtoe demand decline in 2015 was the largest on record, and was the result of flat power industry demand, higher production of renewable power, an increase in natural gas consumption, and a huge increase in nuclear power (+29%) production.

The U.S. had been the world's second-largest consumer of coal, but the decline of its coal demand in 2015 - the largest in the world at 57 MMtoe - dropped the U.S. to third place among the world's coal consumers. In fact, the primary reason for the huge global demand drop for coal in 2015 was the sharp decline in U.S. coal demand. This also resulted in the U.S. having the largest decline of any country in carbon dioxide emissions in 2015. This will be the topic of an upcoming article.

The country vaulting past the U.S. into second place in coal demand rankings last year was India. Over the past decade, U.S. coal demand has dropped nearly 30%, while India's has doubled. Of course India has a much larger population than the U.S., so we are still well ahead on a per capita demand basis, but still behind China on that measure. In any case, India's appetite for coal doesn't seem likely to abate any time soon:

160621TELcoalindiaus

So what do the 2015 trends mean for the U.S. and the global coal industry? One factor depressing U.S. demand for coal in 2015 was extremely cheap natural gas. That competing fuel has remained inexpensive thus far in 2016, but very recently prices have finally rebounded a bit. Costlier natural gas would give the power producers who can switch back to coal an incentive to do so.

On the other hand, government regulations will continue to discourage carbon dioxide emissions, countering coal's price advantage.

Most of the countries with the substantial supply/demand imbalances in the coal market are located in the Asia Pacific region. India, Japan, and South Korea are the major Asian coal importers, while Australia and Indonesia export the bulk of their coal output.

US coal producers are at a geographic disadvantage to Australia and Indonesia when it comes to supplying India, China, Japan and South Korea, so it may be hard for them to compete in these markets.

Global coal demand may have peaked, but we can only know this with a few years of hindsight. In any case, China is pretty desperate to rein in its coal consumption, while India looks set to continue its long run as the coal consumer whose demand is growing fastest. China's demand fell in 2015 more than India's demand grew, but the Asia Pacific region as a whole saw coal consumption tick up by 0.2%.

In the U.S., I see the industry continuing its slow decline. It's not a sector for the timid, but certain coal producers are positioned to persevere and profit from their rivals' troubles. We discussed two such opportunities in the most recent issue of The Energy Strategist.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical Investing Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Investing


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Joan Robinson’s Critique of Marginal Utility Theory
The Truth About Trade Agreements - and Why We Need Them
News Blog
Where U.S. Weekly Wages Go The Furthest
What We Read Today 09 December 2016
How To Stop Using Filler Words Like Um And Uh
02 December 2016: ECRI's WLI Growth Index Improvement Continues
Preliminary December 2016 Michigan Consumer Sentiment Highest Since Early 2015
October 2016 Wholesale Sales Improved
Rail Week Ending 03 December 2016: Finally A Positive Month
November 2016 CBO Monthly Budget Review: Total Receipts Up by 1 Percent in the First Two Months of Fiscal Year 2017
Infographic Of The Day: Copyright - Illegal Download
Early Headlines: Asia Stocks Mixed, Oil Steady, Bank Mafia, Trump To Remain TV Producer, US Life Expectancy Down, India Stocks Suffering, Park Impeached, China Struggles To Support Yuan And More
Heavy Metal And Hard Rock Albums That Went Certified Diamond Status
Down The Drain: Wastewater With The Most Cocaine
Apple's App Store Set For 5 Million Apps By 2020
Investing Blog
Are Your Trade Entries Patient Enough?
Investing.com Technical Summary 08 December 2016
Opinion Blog
Looking At Everything: Trump's $1 Trillion Infrastructure Plan
The Global Financial Mess Is Due To Political Failure
Precious Metals Blog
Silver Prices Rebounded Today: Where They Are Headed
Live Markets
09Dec2016 Market Close: Wall Street Closes On A New High, Trump Sugar High, Crude Prices Testing Resistance, US Dollar Melts Higher
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government



Crowdfunding ....






























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved