The Australian Bureau of Agricultural and Resource Economics is assuming a gradual global economic recovery will start in late 2009 and gain strength through 2010.

For this calendar year ABARE has forecast Australia’s metallurgical coal exports, some 57% of global trade in 2008, to fall 15% to 115 million tonnes as a result of the steel slump.

US and Canadian exports of the commodity are forecast to dive 28% and 24% respectively, with ABARE saying the larger fall reflects the higher production costs compared to Australian mines.

For 2010 ABARE expects improving demand and economic conditions to increase Australian metallurgical coal exports by 4% to 120Mt, while US exports are tipped to remain unchanged at 29Mt and Canadian exports are forecast to rise 5% to 22Mt.

Earnings from metallurgical coal will dive this year, with big cuts in annual contract prices from the unprecedented high levels achieved in 2008.

Estimating an average 57% decline in contract prices for metallurgical coal this calendar year, ABARE forecasts a 46% fall in export earnings from the commodity to $A19 billion in 2009-2010.

However, last year’s record high annual contract prices, reaching $US300 a tonne for premium coking coal, have led to windfall Australian export earnings for the commodity in the current financial year.

ABARE said the prices helped surpass a 13% slide in export volumes as the global downturn kicked in, with exports reaching $A34 billion in revenue, a 115% surge from the previous year.

In thermal coal, ABARE has estimated demand to remain steady in 2009 at around 700Mt.

Japan’s imports are forecast to dive 14% to 115Mt and stay at that level in 2010, with ABARE crediting the restart of three nuclear plants along with the economic downturn for the fall.

Korean imports are predicted to increase by 2% or 7Mt this calendar year to 75Mt and to grow another 5% to 79Mt.

ABARE said the increasing demand would come from the completion of new coal-fired capacity in the country in late 2008 and early 2009.

India remains tipped to be one of the fastest-growing coal importers, with imports forecast to jump by 18% to 40Mt this calendar year and to grow another 18% to 47Mt in 2010.

Declining domestic coal production in Europe and economic contraction has ABARE estimating a 3% fall in thermal coal imports in the Euro Zone to 187Mt in 2009.

ABARE has noted the importance of China during the global downturn as a potential risk in all its forecasts, as domestic demand from the nation has helped lift the commodities of coal, iron ore and copper out of the doldrums this year.

Though China has vast reserves of thermal coal, ABARE estimates thermal coal imports to increase 6% this year to 36Mt.

The forecaster said the majority of coal imports went to southern coastal areas, far from the coal-producing regions in northern China, while a number of small and medium-sized mines had had their production halted due to safety issues.

Lower freight costs in the first half of the year have favoured exporters into China, but ABARE expects higher freight rates and increased production from the large domestic producers to slow China’s thermal coal imports during the second half.

ABARE has predicted China’s imports to gain 11% to 40Mt in 2010 due to increasing electricity demand as new coal-fired plants come online.

Australia’s thermal production is estimated to increase by 8% to 201Mt for this financial year, but weaker demand from Asia has ABARE expecting a 5% cut in production to 191Mt in the next 12 months.

ABARE also sees Australian thermal coal exports falling 6% in the period, particularly on the back of weak Japanese demand.

US thermal exports have been tipped to dive 28% to 25Mt this calendar year and excess supply from Colombia has ABARE estimating US exports will drop another 5% to 24Mt in 2010.

Indonesia’s thermal coal exports are forecast to reach 203Mt this year, a jump of 3%, and to gain another 4% to 212Mt in 2010, as a result of higher output from the country’s existing mines.