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Monday, 28 August 2017 10:30

Market paradoxes Featured

Market paradoxes

“The Russian coal industry makes a significant contribution to the country's economy and diversification of its energy balance. Currently coal accounts for more than 14% in the energy mix of the Russian Federation and is the third most important energy resource. Despite the unfavorable economic situation in recent years the output has recovered and is increasingly growing (385.7 million tonnes in 2016 compared to 257.9 million tonnes in 2000, that is, 1.5 times), coal enrichment (187.6 million tonnes in 2016 against 84.8 million tonnes in 2000, 2.2 times), as well as exports (171.4 million tonnes in 2016 against 37.5 million tonnes in 2000, at 4,5 times)”, Energy Minister of the Russian Federation Alexander Novak told in the author's column, Caspian Energy News (www.caspianenergy.net) reports with reference to the press statement of the Minister of Energy of the Russian Federation.

“Russia plays a significant role in meeting the global demand for this mineral resource. Russian coal is exported stably to 75 countries around the globe. For 7 months of 2017 exports have grown y-o-y to reach 13 million tonnes”, the minister said.

It bears reminding that according to the bp plc’s annual report on global trends in the energy sector, in 2016 global coal consumption fell by 1.7% against the background of a reduced demand for this type of fuel in most countries, and this is the record figure.

At the same time in 2005-15, coal consumption was growing at an average annual rate of 1.9%.

In China, the world's largest coal consumer, consumption fell by 1.6% last year to the all-time low for 6 years. In the United States the consumption has been declining for the fourth consecutive year. The indicator declined in all continents, except Africa.

Germany, Europe's largest coal consumer, reduced its coal use by 4.3%. In the UK, demand plummeted by 52.5%.

Just 10 years ago, no one could have imagined that coal companies' shares would fall by 90% in the last 2 years, while coal-fired power plants would start losing profitably to their gas competitors everywhere. If in 2009 there were 593 coal-fired stations in the United States, in 2013 their number dropped to 518, and the total capacity to 303 GW. According to the data of the Ministry of Energy, their capacity has decreased by another 3.3 GW.

The conditions occurred in the market turned out a catastrophe for coal producing companies. Peabody Energy , leader of this sector, has lost 98% of capitalization since April 2011 while shares of Arch Coal and Alpha Natural Resources fell by 99.2% and 99.6% respectively. Teck Resources, the second biggest exporter of coking coals in the world, will stop coal production at its six states in Canada. Grande Cache Coal has announced a temporary closing of the coal mine in Albert.

 

Experts note that the present price of coking coals fell below a 7-year minimum amid the global reproduction and low demand for it in China. As the Canadian Press reports, the Canadian export market of coal which mainly consists of metallurgical coal used in the steel industry has reached its peak in 2011 when the prices were over $300 per ton. Prices for metallurgical coal totaled less than $90 per ton in the third quarter of 2015 because of the oversupply and weakening of demand in China.

From 2017 Germany will transfer 13% of coal-operated power plants to reserve and pick up facilities having high contamination figures.

More details:  https://minenergo.gov.ru/node/9075

Person in charge of the newsline: Fidan Isayeva 

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