ABARE predicted in its quarterly forecasts growth in world thermal coal trade would remain constrained in 2004 by limited spare infrastructure in Australia and South Africa and a reduction in exports from China.
Despite limited supply fueling price increases, Australia and South Africa haven’t been able to take full advantage of rises, resulting in only marginal export growth in 2004.
With Australia, South Africa and China not able to come to the party, Indonesia has stepped into the fold, accounting for most of the growth in world thermal coal trade in 2004.
It wasn’t all deflating news, ABARE said rail investment in 2005 - including the rail connection to port facilities in Newcastle - would allow exports to expand rapidly next year.
ABARE forecast thermal coal trade to increase three percent to 487 million tonnes in 2004 and to grow to 499Mt in 2005, a 2.5% increase.
Thermal coal export earnings are forecast to increase by around 53% to A$7.1 billion in 2004-05.
On the coking coal front, ABARE predicted a 6% jump to 215 million tonnes in 2004 for world metallurgical trade, underpinned by higher blast furnace steel production in Asia, the Russian Federation and Brazil.
In 2005, world metallurgical trade is forecast to increase by 2% to 219 million tonnes.
To feed the Chinese expanding steel industry, the country’s government has restricted exports and expanded coke making capacity. This, together with investments in coke making capacity in Japan, Germany, the Russian Federation and Brazil, will result in increased demand for metallurgical coal to feed the coke ovens in 2004 and 2005.
To meet coking coal demand, Australia and Canada have made significant investments in new production capacity – including Broadmeadow, Hail Creek, Moorvale, Tahmoor North, Eaglefield and Grasstree.
Australia could add as much as 25 million tonnes to hard coking coal and PCI production capacity over the next three years.
Australian metallurgical coal export earnings are expected to increase by 38% to $9.2 billion in 2004-05.
