Prices for thermal coal on the spot market since the beginning of 2019 fell by 39%, to 52.35 USD per ton, according to the Agency S&P Global Platts. It noted that, if prices did not recover until the end of the year, the drop is the biggest since 2007.
Reduction of energy demand, the excess LNG and China's attempts to become more self-sufficient in terms of coal production are putting pressure on prices of coal.
In Europe, India and Japan, the reduction or slowing of growth in steel production has led to falling prices for coking coal. Spot prices since the beginning of this year fell by 38% to 136 USD per ton.
Falling coal prices have hurt the American manufacturers, leading to the bankruptcy of some companies such as Blackhawk Mining LLC, and Westmoreland Coal Co. At the same time, it can ease the pressure on steel producers in Europe, where the decline in sales and rising costs have a negative impact on profitability.
"the Main problem in both markets is excess supply," said a senior Director of IHS, Markit David Price. "The Outlook for the thermal coal market next year does not look good. The situation of coking coal looks a little better, but the impact on international prices will still have China," he said.
coal Consumption in the world declined in 2019 compared with a year earlier, said the International energy Agency (IEA) last week. This is mainly due to the anticipated reduction in the production of electricity more than 250 TWh.h, or more than 2.5%, which is record fall.
the engine of consumption in the global coal market remains China, which accounts for about half of total demand. In recent years, Beijing seeks to increase the consumption of Chinese coal due to supply constraints from other countries, e.g. Australia, which also puts pressure on prices.
"the Chinese government wants to reduce dependence on imported coal," says industry analyst of the consulting company CRU Group Manjot Singh. "They intend to protect domestic industry, since it is a source of jobs for a large number of people", - said the expert.
as a result of these efforts, the coal in China is becoming more than in international markets, says Singh. However, prices in China may decline as domestic consumption increases and new infrastructure makes the transportation of coal in the country is cheaper.
Additional pressure on the price of coking coal has slowing steel production.
steel Production in six of the 10 largest oil producing countries may be reduced in the current year, according to the world steel Association (World Steel Association, WSA).
Recall that the European Union has decided to completely abandon the coal in the coming years due to its high emissions CO2. Program on the abandonment of coal in the EU is estimated at tens of billions of dollars. Taken last month European Green Agreement sets how to make Europe the first continent climate neutral by 2050, strengthening the economy, improving health and quality of life.