Global demand for coal is set to return to an all-time high in 2022, according to the International Energy Agency (IEA).This comes despite a slowing global economy and ongoing drop in demand in China where Covid-related lockdowns continue to hamper the manufacturing sector. In its latest coal market update, the IEA estimates that coal consumption will rise in 2022, taking it back to the record level it reached nearly a decade ago.In late 2021, the agency estimated that global coal consumption in 2024 would be only 1.2% higher than 2021.Based on current economic and market trends, global coal consumption, however, is forecast to rise by 0.7% this year, to eight billion tonnes, assuming the Chinese economy continues to recover throughout the second half of the year.According to figures released by international shipping agency Bimco, coal had already seen growth of 0.5% midway through the year. “And it is increasing, especially after the Indonesian export ban,” said Niels Rasmussen, senior analyst at Bimco.Both China and India have also increased their domestic coal mining targets for the next few years. China has said it aims to mine more this year than the estimated consumption in 2024, and from January to April mining was up 11% year on year (YOY). India, on the other hand, is aiming for domestic mining to match consumption by 2024, and year-to-date mining has been up 9% YOY. In the short term, both countries are expected to continue to import coal to rebuild low stocks, but in the longer term, they are aiming for greater self-sufficiency.According to the IEA, coal consumption in the European Union is expected to rise by 7% this year on top of last year’s 14% jump. This is being driven by demand from the electricity sector where coal has increasingly been used to replace gas, which is in short supply and has seen huge price spikes following Russia’s invasion of Ukraine. Several EU countries have announced plans to extend the life of coal plants that were scheduled for closure, reopened closed plants, or are raising caps on their operating hours to reduce gas consumption.With the EU banning Russian coal exports, this has opened the door for exporters of the bulk commodity in other regions. South African coal exports have surged, as European countries that have been importing some 45% of their coal from Russia have started scrambling for other suppliers.Leading South African coal exporter Thungela, part of the consortium that owns the continent’s largest coal export facility, the Richards Bay Coal Terminal (RCBT), is reported to have increased coal exports in the first half of the year by 720%. South Africa is considered to be a better option for coal to Europe than Australia and South American coal as it has a freight advantage. At the same time, however, exports to Asia have seen a decline. South Africa has, however, been unable to take full advantage of the opportunity to increase its exports due to the lack of logistics capacity to transport coal from the mines to the port.
