How unrelated recent developments in China, India and Germany highlight just how harsh it can be to maintain a competitive electricity mix without coal

  • The Chinese correction was short-lived as domestic prices are on the rise again, fuelling the Asia/Pacific complex. This is also due to issues in gas supply. In fact the government has been recently forced to reverse their strategy and restarted a coal power plant in Beijing as the gas supply is not sufficient.
  • Indian coal-fired generation fell to 76.7TWh in November, bang on with our forecast.
  • In India, a partial ban on petcoke could be announced on Monday. We provide various quantitative assumptions for the impact on coal demand.
  • The return to the import market of large Indian utilities in 2018 is also pointing to stronger international steam coal demand in the coming months. Here again this highlights how difficult it is for the Indian government to replace steam coal imports with domestic material.
  • According to our own analysis, based on detailed shipping data, Indian steam coal imports hit their highest level since May in October, at 12.1m tonnes.
  • In another interesting political development, the leader of the German SPD party and a potential member of the next coalition government has mentioned that Germany could not afford to sacrifice energy security, by closing coal-fired power plants too quickly, for the sake of climate change targets.
  • Turkish coal-fired power generation, increased to 5TWh last month, up 5.9% m-o-m and up 7% y-o-y and marginally above our forecast.
  • November financial trading volumes were the highest in 12 months, at 247.4m tonnes, although this was still down 41.9% y-o-y.
  • Year-to-date paper volumes reached 2.19bn tonnes, down 52% y-o-y. Trading on ICE Futures is down 34%, CME activity collapsed at just 550m tonnes.

 

Guillaume Perret
Founder and Director, Perret Associates Ltd

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