At a time when industry analysts laughed at the suggestion, Carbon Tracker was already modelling the impact of Chinese thermal coal demand peaking on
the seaborne markets.
Most countries have a domestic supply or can easily and affordably access it on
the seaborne market and therefore they have confidence in coal supply.
The companies in aggregate represent 66 % of the global
seaborne market in iron ore, 53 % in copper, 42 % in metallurgical coal and 28 % in thermal coal.
China's desire to reduce imports will cascade through
the seaborne market, impacting prices and asset values for export mines in the US, Australia, Indonesia and South Africa.
Not exact matches
With the Chinese
market a major driver of coal demand in Asia, any policy changes in the country will affect prices, contributing to the likelihood of continued price volatility in the
seaborne coal
market, wrote Wood Mackenzie's principal analyst for mining and metals fundamentals research, Rory Simington in a Nov. 16 report.
CTI's analysis shows that in a low demand scenario the
seaborne coal
market will account for an average of 850 million tonnes per year over the next 20 years.
One result: the deep structural decline in
seaborne thermal coal
markets.
If the US coal industry succeeds in exporting large quantities of publicly owned coal from the Powder River Basin, where most publicly owned coal is mined, to the Pacific
seaborne coal
market, it would have a similar effect, according to an economic analysis from Dr. Thomas Power, «The Greenhouse Gas Impact of Exporting Coal from the West Coast.»
China could become a net exporter of coal again before 2020, which would see the
seaborne thermal coal
market weakened again, the report finds.
With China acting as the marginal buyer on the
seaborne coal
market, investors should prepare themselves for a world where China is a net exporter.
The Chinese government are like the central bank of the
seaborne coal
market.