BAKU, Azerbaijan, April 28. Coal prices are expected to remain above their 2015-2019 average, while falling sharply by 42 percent this year, Trend reports with reference to the World Bank’s Commodity Markets Outlook.
The WB expects a further decline of 23 percent in coal prices in 2024. The high carbon prices set in Europe, as well as the lower prices for LNG and natural gas will put downward pressure on coal demand. On the other hand, amid China’s growing demand, Indonesia, Mongolia, and Russia are set to boost the exports. Moreover, after the lifting of the Chinese ban, Australian exports are expected to rise significantly. Moreover, Indonesia and the US will increase coal exports by 5 percent and 4 percent, respectively.
“In the short term, upside risks include the possibility that the recovery in China will be stronger than expected, which would raise demand for coal in the industrial and power sectors, increasing import demand and prices. Production shortfalls, or reduced Russian exports, would raise prices. In Europe, higher natural gas prices next winter could encourage switching from gas to coal,” reads the report.
On the other hand, deeper-than-expected slowdown in global activity would reduce energy demand more broadly.
“Favorable weather conditions, or reduced demand from China, would also dampen prices. Russia’s invasion of Ukraine has strengthened the incentives to transition away from fossil fuels, both through increased renewable energy production and reduced energy consumption— particularly in the United States and Europe. This contributes to the expectation that coal consumption by the United States and Europe will continue to fall. The IEA expects a sharp decline in coal consumption by 2025, particularly in China: global consumption is expected to peak in 2023, and plateau thereafter (IEA 2022b). Most of the additional energy demand in China is being filled by renewable sources, while generation from renewables in the United States has already surpassed generation from coal (EIA 2023b),” the WB analysts say.
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