BAKU, Azerbaijan, March 7
By Leman Zeynalova – Trend:
The coal market is relatively strong in the short term but will be under increasing pressure due to competition from gas and also thanks to the increasing focus on net-zero emissions targets globally, Trend reports with reference to the Gas Exporting Countries Forum (GECF).
GECF analysts believe that without the commercial deployment of CCUS, which is not assumed, the prospects for demand are weak and the price is expected to remain depressed.
“There is an important challenge for technological advancements in coal production in this respect. Coal prices have been decreasing due to competition with natural gas for electricity generation, although supply problems in South Africa and strong demand from Indian industrial buyers have sustained South African coal prices. In Australia, coal prices have been pressured by China’s more stringent import restrictions. We expect that in the long-term, prices will be driven by these factors and global prices for coal will fall below USD80/t on average,” reads a report published by GECF.
The long-term Outlook for thermal coal prices is to a lesser extent shaped by the supply-demand balance, as capacity is expected to adjust to the accelerating decline in global demand.
“So far, coal remains the cheapest power sector energy source on a non-adjusted basis. The coal market will be significantly impacted by: (i) the global increase in carbon prices and proactive air quality policies in developing countries; and (ii) strong electricity demand growth in capital-strapped developing Asia and Africa, and the strategies for the energy sector which those countries will adopt. While modern coal power has higher emissions than any other modern source of energy, it is still widely seen in these countries as a valid competitor to reduce emissions against traditional biomass and older technology,” the report says.
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