Commodity Insights

Thermal Coal Market Outlook Case Study

CoalLoader

With thermal coal providing 38% of the world’s electricity, our client wanted a market sizing study on the seaborne thermal coal market.

Recommendation

As the key driver to thermal coal is electricity consumption we constructed a model that integrates macro assumptions and demand drivers (i.e. increasing energy intensity per capita and the adoption of electric vehicles), to estimate demand for thermal coal.

Methodology

Given the importance of thermal coal as a low cost source of power generation, our methodology involved an assessment of the demand sectors under a range of custom scenarios jointly developed with our client. Having undertaken similar analysis in other commodity markets we developed a top-down demand model using primary research to quantify the current and future electricity demand. Given the potential for increased demand from the adoption of electric vehicles, our model incorporates an assessment of car manufacturers’ current plans to convert to electric vehicle production.

Outcome

Commodity Insights provided the client with a 10 year outlook for the thermal coal market that is underpinned by robust economic growth in highly populated nations in Asia. While thermal coal has been the main fuel source powering this expansion, competition from zero emissions energy sources has reduced the rollout of coal-fired power stations in recent years. Despite this, low-cost electricity will be required to support ongoing expansion in energy-intensive heavy industries. This underpinned our forecast of seaborne thermal coal demand increasing 23.5% by 2030, from 947Mt in 2019.

This forecast for seaborne thermal coal demand should not be confused with global thermal coal consumption, which is more than 5Gt and is expected to decline by 2040. This is primarily due to declining demand in North America and Europe as they transition into natural gas and renewables. 

Mark Gresswell

PROJECT MANAGER

Mark Gresswell
Director
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Matt Anderson

RESEARCH LEAD

Matt Anderson
Principal
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