Coal Train to China Slowing
From Houston Chronicle
By Jennie Keaver
As environmental regulations and cheaper natural gas dampened demand for coal in the United States over the past few years, international markets absorbed much of the slack.
Coal exports have almost tripled in the past six years, according to the Energy Information Administration.
About 75 percent of the exported coal went to Europe and Asia in 2012.
Chinese demand for coal has been growing so quickly, the agency reported, that the country now accounts for 47 percent of global coal consumption – almost as much as the rest of the world combined.
But a study by research firm IHS Cera found that U.S. coal companies counting on China to make up for slumping markets at home should come up with Plan B.
That study predicted Chinese coal imports will peak by the end of the decade and enter a prolonged period of decline due to a combination of moderating demand and increased domestic production.
“Many companies that have targeted China as their strategic supply region in the long term may need to rethink that strategy,” Xiaomin Liu, associate director of IHS Cera in Beijing, said in a statement. “Some international suppliers will be able to compete effectively, but others will struggle to find a competitive edge as China’s market becomes ever more liquid.”
The United States is the fourth-largest exporter of coal in the world, behind Australia, Indonesia and Russia, sending an estimated 124 million tons abroad in 2012.
That offered relief to an industry that saw deteriorating demand in the United States.
China became a net coal importer in 2009, driving the international coal market. But the study suggests the Chinese coal import boom will be short-lived, for some of the same reasons that coal is in decline in the United States.
Here, many electric generating plants are switching to low-priced natural gas, newly abundant because of drilling technologies that give producers access to gas locked in shale formations.
In Texas, coal-fired plants produced less than 34 percent of the electricity flowing through the grid operated by the Electric Reliability Council of Texas in 2012, down from 39 percent in 2011.
Natural gas produced 44 percent of the agency’s electricity in 2012.
That’s one reason IHS Cera is predicting demand for imported coal will fall in China.
The firm’s study said Chinese imports reached a high of 145 million tons last year and will decline gradually through 2035.
Coal demand in China will peak around 2025 at about 5.1 billion metric tons, up from 3.7 billion metric tons in 2011, according to the study.
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