Australian coal production up 4.3%

AUSTRALIAN economic forecasting group ABARE estimates that in the 12 months to June 2002, Australia produced 268 million tones of coal, a 4.3% increase on last year.
Australian coal production up 4.3% Australian coal production up 4.3% Australian coal production up 4.3% Australian coal production up 4.3% Australian coal production up 4.3%


Staff Reporter

ABARE’s June quarter report, Australian Commodities, forecast a further growth in Australian coal production output of 1.3% to 272Mt in 2002-03. Export earnings rose by nearly $2.6 billion in 2001-02 to around $13.4 billion but this is expected to be lower in 2002-03, despite increases in production. The fall in coal prices and a forecast appreciation of the Australian dollar are the main factors.

The 7.7% knock to the Australian thermal coal reference price for Japanese fiscal year 2002 has taken the price to around US$31.85 a tonne, with spot prices for thermal coal falling around 9% since March to about US$26.50/t in late May.

“This fall reflects sluggish energy demand growth in Asia, Europe and the United States, in line with weak growth of the global economy, a mild northern hemisphere winter and rising coal supply from China, Indonesia and the Russian Federation,” according to the ABARE report.

Some firming of international spot prices for thermal coal is expected as production cuts announced by Australian, South African and Colombian producers kick in and energy demand picks up.

During 2001 global thermal coal trade increased by 11% to 444Mt. Increased exports from China, Indonesia and the Russian Federation were mostly accountable for this increase. These three countries continue to pose a competitive threat to Australia’s dominance of the traded thermal coal market, according to ABARE. China increased thermal coal exports by 65% to an estimated 79Mt, though exports did drop in the March quarter by 29% to 15Mt, compared with the previous quarter.

The consumption of traded thermal coal will grow by 1.8% this year (11% growth in 2001), and a further 4% in 2003 to 471Mt.

It is anticipated that 9.2 gigawatts of new coal fired electricity generation capacity will be commissioned in Asian economies through to the end of 2003, requiring over 20Mt of additional coal feed.

Australian hard coking coal prices are expected to rise for a second consecutive year once negotiations with Japanese steel mills are concluded. A tightening in the global supply–demand situation for hard coking coal in the latter half of 2001 and first part of 2002 has placed significant upward pressure on prices for these coals ABARE said.

Growth in world demand for steel is expected to increase global blast furnace steel production by 4.2% to 582 Mt by 2003. Trade in metallurgical coal will be boosted over 2002-03 by a forecast fall in coke exports from China due to domestic demand for coke. China exported 15% less coke in the March 2002 quarter.

Australian exports of metallurgical coal in 2001-02 are estimated to have risen by 1.3% to 107Mt, and are forecast to increase by 4.7% in 2002-03 to 112Mt. This is largely due to falls in metallurgical coal exports from the United States and coke exports from China. This lifts Australia’s share of world metallurgical coal trade to around 57%.

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