Coal, Metals & Mining

Power sector coal demand in APAC to 2030

13 August 2020

James Stevenson, Senior Director, Coal Metals & Mining, +61 447 622 258, james.stevenson@ihsmarkit.com

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 IHS Markit presentation to Petromindo - August 2020

Key implications

• 2020 is clearly a very grim year for coal demand globally. APAC is impacted, but the negatives are
at least partially offset by some positives.
• Thermal coal import demand in the region will grow to 2020:
• Import demand will decline in the traditional markets of Japan, South Korea and Mainland China

• These declines are more than offset by growth, especially in India and Vietnam

• APAC suppliers are able to meet this demand growth, but will face some more competition from
Atlantic suppliers

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 IHS Markit presentation to Petromindo - August 2020

Thermal coal import demand to decline around 91 MMt this year

Changes in thermal coal imports, 2019 to 2020 Changes in thermal coal supply expectations

10.0

0.0

Year-on-year change 2019 to 2020 (MMt)

-10.0

-20.0
Required cuts: 91 MMt+
Cuts YTD + announced: ~70 MMt
-30.0

-40.0

-50.0

Mongolia
Mozambique
Colombia
South Africa
Indonesia

Russia

Canada
Australia

United States
Pre-COVID-19 forecast* Current forecast
Source: IHS Markit © 2020 IHS Markit Source: IHS Markit © 2020 IHS Markit

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 IHS Markit presentation to Petromindo - August 2020

Japan, South Korea, Taiwan

Japan imports, annual South Korea imports, annual

140 120
<4 ,20 0 kcal/kg, NA R <4 ,20 0 kcal/kg, NA R
120 100
Million metric tons

Million metric tons

4,200-5 ,00 0 kcal/kg, NA R 4,200-5 ,00 0 kcal/kg, NA R
100
80
5,000-5 ,60 0 kcal/kg, NA R 5,000-5 ,60 0 kcal/kg, NA R
80
60
60 5,600-6 ,20 0 kcal/kg, NA R 5,600-6 ,20 0 kcal/kg, NA R
40
40 >6 ,20 0 kcal/kg, NA R >6 ,20 0 kcal/kg, NA R

20 20

0 0
201 3 201 5 201 7 201 9 202 1 202 3 202 5 202 7 202 9 201 3 201 5 201 7 201 9 202 1 202 3 202 5 202 7 202 9
Source: IHS Markit © 2017 IHS Markit Source: IHS Markit © 2017 IHS Markit

Taiwan imports, annual • Modest coal demand decline expected over the coming
70
<4 ,20 0 kcal/kg, NA R decade
60
Million metric tons

4,200-5 ,00 0 kcal/kg, NA R

50 • Nuclear supportive for near term coal demand in Japan
5,000-5 ,60 0 kcal/kg, NA R
40
30 5,600-6 ,20 0 kcal/kg, NA R • Environmental policies increasingly encroaching on coal
20 >6 ,20 0 kcal/kg, NA R demand
10
0 • Coal-gas competition a developing theme
201 3 201 5 201 7 201 9 202 1 202 3 202 5 202 7 202 9
Source: IHS Markit © 2017 IHS Markit

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 IHS Markit presentation to Petromindo - August 2020

Mainland China

China imports, annual • Import restrictions are a key driver not just for 2020 but for
at least a few years to come. If imports are left
250 unconstrained, economics will drive them higher. But IHS
<4,200 kcal/kg, NAR Markit expects that import restrictions will curtail imports
on an ongoing basis.
200 4,200-5,000 kcal/kg,
NAR • Ultimately imports will decline, driven by:
Million metric tons

150 5,000-5,600 kcal/kg, • Growth of coastal nuclear

NAR
• Impact of hydro
5,600-6,200 kcal/kg,
100 NAR • Growth of LNG regasification and gas capacity

>6,200 kcal/kg, NAR • Growth of coal-by-wire

50
• Better domestic coal transportation

• Move of ‘center of gravity’ of coal generation inland

0
2013 2015 2017 2019 2021 2023 2025 2027 2029

Source: IHS Markit © 2017 IHS Markit

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 IHS Markit presentation to Petromindo - August 2020

India

• After the sizeable 2020 downturn, Indian import demand growth will
India imports, annual
resume, and will continue to 2050.
250 • However, 2020 is giving domestic Indian suppliers (primarily CIL) a
<4,200 kcal/kg, NAR chance to catch up with domestic demand. Coming out of COVID-
19, domestic supply will take some market share from imports. This
200
4,200-5,000 kcal/kg, will be an ongoing phenomenon – caused by COVID-19 but not
NAR constrained to 2020. Additionally, changes in ash blending rules
further favor domestic coal over imports.
Million metric tons

150 5,000-5,600 kcal/kg,

NAR
• This is bad news for Indonesian suppliers, who will likely see some
lost exports to India.
5,600-6,200 kcal/kg,
100 NAR
• Ultimately demand growth will still be massive, with a staggering 92
>6,200 kcal/kg, NAR GW of new capacity coming online by 2030.
50

0
2013 2015 2017 2019 2021 2023 2025 2027 2029

Source: IHS Markit © 2017 IHS Markit

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 IHS Markit presentation to Petromindo - August 2020

Vietnam

Vietnam imports, annual • GDP growth expectations remain positive this year (1.1%)

• Weak hydro year is stimulating record imports in 2020—

90
<4,200 kcal/kg, NAR despite global pandemic
80
• However, IHS Markit expects import strength to wane in
70 4,200-5,000 kcal/kg, the second half:
NAR
60 • Wet season enabling hydro generation
Million metric tons

5,000-5,600 kcal/kg,
50 NAR
• Recent rise in COVID-19 cases
40 5,600-6,200 kcal/kg,
NAR • Longer term, Vietnam is still in the midst of a massive
30 coal-fired capacity build:
>6,200 kcal/kg, NAR
20 • More than 10 GW of coal-fired capacity is under construction and
will come online by 2025
10
• Another 10 GW is planned (and likely) and will come online
0 between 2025 and 2030.
2013 2015 2017 2019 2021 2023 2025 2027 2029
• Capacity build beyond 2030 will likely slow dramatically
Source: IHS Markit © 2017 IHS Markit

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 IHS Markit presentation to Petromindo - August 2020

Elsewhere in Asia

Philippines imports, annual Cambodia imports, annual

40 14
<4 ,20 0 kcal/kg, NA R <4 ,20 0 kcal/kg, NA R
35 12

Million metric tons

Million metric tons

30 4,200-5 ,00 0 kcal/kg, NA R 4,200-5 ,00 0 kcal/kg, NA R

10
25 5,000-5 ,60 0 kcal/kg, NA R 5,000-5 ,60 0 kcal/kg, NA R
8
20
5,600-6 ,20 0 kcal/kg, NA R 6 5,600-6 ,20 0 kcal/kg, NA R
15
10 >6 ,20 0 kcal/kg, NA R 4 >6 ,20 0 kcal/kg, NA R

5 2
0 0
201 3 201 5 201 7 201 9 202 1 202 3 202 5 202 7 202 9 201 3 201 5 201 7 201 9 202 1 202 3 202 5 202 7 202 9
Source: IHS Markit © 2017 IHS Markit Source: IHS Markit © 2017 IHS Markit

Thailand imports, annual Malaysia imports, annual

30 45
<4 ,20 0 kcal/kg, NA R
40
25 4,200-5 ,00 0 kcal/kg, NA R <4 ,20 0 kcal/kg, NA R

Million metric tons

Million metric tons

35
5,000-5 ,60 0 kcal/kg, NA R 4,200-5 ,00 0 kcal/kg, NA R
20 30
5,600-6 ,20 0 kcal/kg, NA R 5,000-5 ,60 0 kcal/kg, NA R
25
15 >6 ,20 0 kcal/kg, NA R 5,600-6 ,20 0 kcal/kg, NA R
20
SSCC + PCI >6 ,20 0 kcal/kg, NA R
10 15
HCC SSCC + PCI
10
5 HCC
5
0 0
201 3 201 5 201 7 201 9 202 1 202 3 202 5 202 7 202 9 201 3 201 5 201 7 201 9 202 1 202 3 202 5 202 7 202 9
Source: IHS Markit © 2017 IHS Markit Source: IHS Markit © 2017 IHS Markit

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 IHS Markit presentation to Petromindo - August 2020

Global demand grows slowly over the next ten years, as growth in APAC
slightly outweighs declines elsewhere
Thermal demand Thermal supply
1,200 1200.0

1,000 1000.0

800 800.0
Million metric tons

Million metric tons

600 600.0

400 400.0

200 200.0

0 0.0
2015 2020 2025 2030 2015 2020 2025 2030

Europe Mediterranean
Americas Indian Ocean Australia Indonesia South Africa Colombia Russia
Southeast Asia East Asia (China, Hong Kong, JKT) United States Canada Mozambique Others
Other

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