Speaking at Coaltrans India yesterday, Wood Mackenzie coal market analyst Prakash Sharma said there would be significant growth in demand for seaborne thermal coal from China and India from now until 2030.

Rapid economic expansion in the two growing countries will fuel demand for electricity, while the reliance of Asian economies on coal will lead to an increase in trade flows.

Sharma said significant growth of thermal seaborne supply was expected to come from both emerging and existing coal basins.

“With Asia at the centre of future thermal coal import requirements, current Pacific Basin suppliers will be first in line to benefit,” Sharma said.

“Waiting in the wings though are emergent players some of which, particularly in Australia and the US, will make up a significant portion of their region’s future supply growth.

“The emerging basins to keep an eye on are Australia’s Surat and Galilee basins, Indonesia’s Kalimantan and Sumatra basins as well as basins in Mozambique, Mongolia, Russia’s Far East, and the west coast of the United States.”

Despite the tipped expansions in thermal coal supply, Wood Mackenzie is expecting long-term prices to remain high in the seaborne market.

“There may be short term seasonal fluctuations such as a dip in Q2 prices this year due to economic uncertainty but in the long-term, the Newcastle reference coal price will increase progressively and is forecast to remain above free-on-board $US120 per tonne in real 2011 US dollar terms,” Sharma said.

The high prices are due firstly to higher production costs and the substantial investment required in new mines and supporting infrastructure development for emerging coal basins.

Wood Mackenzie anticipates a declining trend in export thermal coal quality as large volumes of low-rank coals from Indonesia enter the seaborne market.