ABARE predicted strong world demand for coal would result in higher Australian shipments. However, coal export earnings were forecast to fall by 9% to around $10.8 billion due to the effects of a stronger Australian dollar and strong competition between major global exporters.

ABARE’s thermal coal outlook was rosy compared to recent hard times experienced by the sector, with higher Asian and European demand expected to underpin increased trade.

Asia’s strong demand would be supported by the country’s increased electricity demand associated with higher growth rates in industrial production. Increased European demand would be due to high power demand over the past few months and the need to rebuild stocks.

In 2003, Australia was expected to account for approximately 21% of global thermal coal exports, ahead of China, Indonesia and South Africa.

ABARE said world trade of coking coal was forecast to increase by less than 2% to 198 million tonnes in 2003, resulting from increased blast furnace production in Europe and Asia, and increased Chinese demand for hard coking coal.

China was forecast to import about 1 million tonnes of hard coking coal in 2003, an increase of 300% from 2002.

ABARE said increased Chinese exports will result from higher steel production, limited global coke oven capacity relative to demand which will result in high coke prices on export markets, providing an incentive for Chinese suppliers to increase production of coke for export. Lastly, no major new coal production capacity has come on line for China this year.