The impact of Chinas reduced imports on

seaborne coal trade in the Asia-Pacific region

Dr. Fabio Gabrieli
Director
Dry Bulk and Energy Commodity Strategist

Coaltrans Japan
3-4 September 2015
Hilton Tokyo, Shinjuku

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Agenda
What volumes of coal are being supplied to which
destinations?
How long is global oversupply expected to last?
Is there a replacement for China in sight?

2013"thermal"coal"seaborne"trade"(mt)"
AtlanAc"

India"

China"

TwnFKorFJpn"

RoA"

150"
120"
90"
60"
30"
0"
RUS"

ZAF"

IDN"

AUS"

In 2013 Chinese imports peaked at levels similar to the

whole Atlantic importing demand

2015$vs.$2013$thermal$coal$seaborne$trade$growth$(mt)$
China$
15$
0$
!15$
!30$
!45$
!60$
RUS$

ZAF$

IDN$

AUS$

By the end of the year Chinese imports may drop by

90mt vs. 2013 levels, more than 10% of current global
seaborne trade flows

2015$vs.$2013$thermal$coal$seaborne$trade$growth$(mt)$
AtlanDc$

India$

Twn!Kor!Jpn$

RoA$

15$
10$
5$
0$
!5$
!10$
!15$
RUS$

ZAF$

IDN$

AUS$

AUS growth was pretty diversified, ZAF was forced to

switch tons back to ATL, RUS dumped coal into new
markets while IDN drop wasnt only about volume

Indonesia"coal"produc5on"(mt)""
500"
400"
300"
200"
100"
0"
2010"

2011"

2012"

2013"

2014"

2015e"

Indonesian output peaked in 2013 and is finally trending

down

Indonesia$coal$produc7on$growth$(mt)$$
Sub!bit$&$low$rank$

Bituminous$

60$
40$
20$
0$
!20$
!40$
2011$

2012$

2013$

2014$

2015e$

and by end of the year Indo may lose ~30mt of

bituminous coal vs. 2013 levels due poor economics

Indonesia"coal"produc5on"(mt)""
Sub<bit"&"low"rank"

Bituminous"

400"
300"
200"
100"
0"
2010"

2011"

2012"

2013"

2014"

2015e"

Is Indo production drop (quality-wise) relevant, when

Exchange#rate#of#major#producers#vs.#USD#
ZAR#

COP#

IDR#

USDAUD#

RUB#(RHS)#

180#

250#
Index#Jan13#=#100#

160#

200#

140#
150#

120#
100#
2013#

100#
2014#

2015#

continued dollar strengthening

Dry"Bal/c"Index"

Brent"(RHS)"

14,000"

160"
140"
120"
100"
80"
60"
40"
20"
0"

12,000"
10,000"
8,000"
6,000"
4,000"
2,000"
0"
2000"

2002"

2004"

2006"

2008"

2010"

2012"

2014"

all time low freight rates, halved diesel prices

Avg.$fob$cost$improvements$by$AUS$coal$miners$(US$/t)$
2013$

2014$

2015e$

0$

!10$
Currency$

Fuel$

Produc1vity$

and increasing productivity reduced AUS average

FOB costs by ~40% vs. 2012 levels?

Avg.$cost$improvements$by$AUS$coal$miners$(US$/t)$
2012$

2013$

2014$

2015e$

90$
70$
50$
30$
10$
!10$
AUS$FOB$costs$

Currency$

Fuel$

Produc<vity$

So, how low can coal prices go before SnD balances?

Thermal$coal$seaborne$demand$growth$(mt)$
2015e$

2016e$

2017!2020e$

120$
90$
60$
30$
0$
!30$
!60$
Atlan.c$

India$

China$

Rest$of$Asia$

While global demand falters in 2015-2016 to then add

+100mt by 2020

Thermal$coal$seaborne$supply$growth$(mt)$
2015e$

2016e$

2017!2020e$

50$
25$
0$
!25$
!50$
USA$

COL$

RUS$

ZAF$

IDN$

AUS$

Others$

will global supply underperform demand?

Will Indo and China switch roles thru 2017-2020?

Thank you for your attention!

Comments and/or questions are welcome