There’s a certain growth market for coal import in Emerging Asia
This week we will have a closer look at what we call the Emerging Asia (Bangladesh, Malaysia, Pakistan, The Philippines, Thailand and Vietnam) where coal imports are coming from a low base, but is expected to grow considerably going forward.
Thermal coal imports into Emerging Asia is coming from a low base but is growing at a rapid pace. Total coal imports into Emerging Asia were 67Mt in 2015, up 11% from 2014. In the first seven months of 2016, the growth in coal imports have accelerated further with imports of 48Mt being up an impressive 33% from the same period last year. Below we will have a closer look at the growth prospects for each of the countries within the Emerging Asia group.
Vietnam has turned from being a large exporter to a net importer. Imports into Vietnam in the first seven months of 2016 more than tripled to 7.6Mt as new thermal coal plants came on stream. Prior to 2010 Vietnam only had 2,300MW of installed capacity, but since then the fleet has more than quintupled to 13,000MW. Additional capacity of 14,500MW is currently under construction and another 2,500MW are permitted. Thus, we expect Vietnam’s coal import to continue to grow at a rapid pace going forward.
Imports into the Philippines in January-July 2016 of 10.4Mt more than doubled from the same period in 2015. The Philippines thermal coal fleet has increased with about 50% in the last 5 years and is expected to grow with another 50% in the coming years as 3,780MW is under construction and another 750MW is permitted. Hence, we expect that Philippines coal import will continue to grow at a strong pace going forward.
Imports into Pakistan in January-July 2016 of 3.4Mt is up 16% from the same period in 2015. The current thermal coal fleet in Pakistan only totals 150MW. Thus current coal imports mostly consist of coking coal for the steel industry and non-coking coal for the cement industry. That is set to change as 2,880MW of thermal coal capacity is under construction (whereof 1,440MW is situated along the coast) and another 5,400MW is permitted (whereof 2,640 is situated along the coast). The plants currently under construction are expected to be on-stream by 2018 and we therefore believe imports will increase substantially in the coming years.
Malaysian imports year to date July 2016 of 12.2Mt is up 12% from the same period in 2015. The thermal coal fleet in Malaysia totaled 7,900MW prior to 2010. Between 2010 and 2014 no new thermal coal plants were built. However, in 2015 1,100 MW of new capacity was finished and another 1,000MW has come on stream so far this year. With 1,600MW under construction imports will continue to grow going forward.
Thailand has a sizeable thermal coal fleet of 5,450MW with the latest coal fleet expansion dating back to 2012. Imports has thus been fairly stable in the last couple of years. Imports in the first 7 months of 2016 totaled 12.4Mt, which is down 4% from the same period last year. The only plant currently under construction is a 600MW replacement plant. The expectation is therefore that imports will be fairly stable going forward.
Bangladesh only has 250MW of installed capacity but has more than 8,000MW in pre-permit development, imports may therefore increase down the road, but any permitted plans are not likely to come on stream in the next 3-5 years. Bangladesh imported 1.6Mt in the first 7 months of 2016, down 21% YoY.
Collectively the countries within the Emerging Asia group has 23,400MW of new thermal coal fired capacity under construction, 8,700MW of permitted projects and another 73,000MW of projects under various pre-permit/planning stages. Coking coal imports will also grow on the back of increasing industrial production. Thus, we think it is safe to state that the Emerging Asia is a certain growth market for coal imports in the next 3-5 years’ horizon.
Next week our focus will be on the EU where coal consumption will be under strong pressure from renewables and gas. For us, the question is not whether coal imports into the EU will decrease or not, but rather how steep the decline will be. This will to a large extent depend on how fast coal production within the EU will be displaced.