Posted on 17 Feb 2023
Coking coal or metallurgical coal is a key raw material for blast furnace or basic oxygen furnace (BF/BOF) operations. What are the general macro trends, policies and trade flows for this critical raw material.
Met Coal Market
Metallurgical coal is an important ingredient for steel production. The Russia-Ukraine war has caused a shift in the trade flow of the seaborne met coal market. Despite the war, there were demand for Chinese met coke from Europe.1
Demand for steel is expected to remain strong until 2050. The factors include industrialisation in India, growth in green infrastructure development in North America and levelling of China steel demand until 2030. By 2050, the demand for steelmaking coal is expected to
decline. This is due to increased availability in steel scrap and recycling in mature regions, decline in coke rates and steelmaking using natural gas and hydrogen. However, the long-term demand for seaborne coking coal will remain strong.2 The surge in demand for global goods is the primary driver for metals and energy prices.3
Global Perspectives
Australia and China are the major suppliers of coking coal.4 The current Russia-Ukraine war has resulted in increased demand for Australian coal. China also has begun to import coal from Russia and North America.
ASEAN Perspectives
ASEAN is one of the most dynamic and fastest growing economies in the world. Coal is readily available in ASEAN with Indonesia being the largest producers and exporters.5
Development of Met Coal Market in Asia
The domestic coke market continues to fluctuate at high levels and is projected to remain a tight supply-demand situation in the next 3 years.6
India is an emerging exporter of coke with a total export of 1.1 m MT in 2021. Its top export destinations are Asia, Europe and South America. Demand for Indian coke remains high as the country produces top quality coke.
Iron Ore Trade
The economies in ASEAN have improved with the reopening of borders post covid-19. Malaysia is the largest exporter and importer of iron ore over the past 6 years due to iron ore transhipment. Vietnam is the largest net importer of iron ore (18 m MT), followed by Indonesia (7.9 m MT).7
Carbon Credits
Carbon credits are permits that allow an owner to discharge a certain amount of carbon dioxide or other GHG.8 The path to net zero is achieved through decarbonization, neutralization and compensation of all emissions. Coal companies may reduce carbon by: -
Conclusion
As the world transits to lower carbon economy, coking coal may face challenges in the future from technical and financial perspective. The demand for steelmaking coal is expected to decline. However, expectation is that demand for seaborne hard coking coal will remain vibrant.
Sources:
1 S&P Global Commodity Insights, Tiankuo Jiang,
Associate Editor, Steel Raw Materials, May 20, 2022
2 Teck, Réal Foley, Senior Vice President, Marketing & Logistics, May 19, 2022
3 Macquarie Bank Ltd, Serafino Capoferri, May 2022
4 crmalliance.eu/coking-coal
5 aseanenergy.org/coals-role-in-asean-energy/
6 Risun Global Limited, Lawrence Yan, May 2022
7 Wee Jin Yeoh, Secretary General, SEAISI, April 2022
8 theedgemarkets.com
9 Climate Impact X, Carbon Credits, 19 May 2022
Source:SEAISI
