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Coal faces continuing challenges

Thursday, January 8, 2015


Cyclical and structural headwinds undermine confidence in coal.


Since the start of January, Australian benchmark coal has dropped to 62.4 dollars per metric tonne (mt), 25% lower than a year earlier. A combination of climate change-related policies, the shale gas revolution in the United States, and a decline in the cost of renewable energy has heightened competition for coal. Demand has fallen since the industry reached peak production in 2012 following a wave of investment spurred by record prices in 2008 on the back of a rapid increase in demand in the Asia Pacific region.


  • South-east Asia will be a bright spot for coal demand, as consumption is forecasted to double in Malaysia and Thailand.
  • South Korea's 'Eurasia Initiative' will open a new market for Russian coal, using North Korean Rajin port.
  • Japan will promote cleaner combustion technologies, known as ultra-supercritical, as more commercially and economically viable than carbon.
  • Japan's return to nuclear energy could end a golden era for LNG and thermal coal exports to North-east Asia.

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