As energy needs in Asia rise, demand for coal and as a consequence prices of the black fuel are expected to sky-rocket over the next few months. As soon as this year, China is set to overtake Japan as the world’s largest importer of thermal coal. Traders and policymakers, who didn’t expect this change until 2015, now say they expect China’s thermal coal net imports to hit 105m-115m tonnes this year, level with or above Japan, which is expected to buy about 110m tonnes. China was a net exporter of coal until 2007.
Meanwhile to acquire huge quantities of energy, including coal, India has expanded her sovereign fund originally meant only for oil imports to coal as well. India is expected to import at least 50 million metric tons of coal from abroad in 2017 to bolster local production that’s projected to reach 647 million tons. Coal demand in India, Asia’s third-largest energy consumer, may rise by more than 500 million tons from 2008 to 2015 to exceed 1 billion tons.
China has spent at least US$21 billion on overseas resources in the past year compared with India’s US$5.18 billion energy spend. Carved out of massive forex reserves of US$2.4 trillion, China has a clear financial advantage in securing its energy future as compared to India which has reserved US$277 billion in foreign-exchange reserves to bid for energy assets.
As China and India’s appetite for coal burgeons, Greg Boyce, chief executive of US- based Peabody Energy, told investors recently that the world economy was at “the early stages of a long-term supercycle for coal”. Energy processes are not expected to change in either China or India anytime soon, signaling that as energy demands rises, nations need to be weary of the rising price of global energy and carbon emissions.
According to the Financial Times – Coal prices in the Australian port of Newcastle, the benchmark in Asia, have risen again to US$100 a tonne on the back of buying by China, India and other countries. In Europe, coal prices in Rotterdam for delivery in three months – the benchmark – rose last week to US$96 a tonne, the highest since November 2008.