Vilified as a dirty energy source in advanced industrialized economies, coal is booming around the world. Emerging economies are the critical driving force behind the continued growth, but barriers do exist.
In 2012, China is apt to be the driving force of the coal markets, followed by its fellow emerging markets.
Looking to capitalize on Mongolia’s growing importance as a strategic raw materials supplier to resource-hungry China, private commodities company Trafigura is actively expanding its already significant position in the global resource market.
While 2011 was not as radiant as its long term coal projections, both thermal and coking coal markets saw consistent production and consumption growth.
Falling Chinese thermal coal demand in the short-term is falling due to adequate stockpiles. However, the long-term trend is likely to be a growing reliance on foreign sources for Chinese consumers.
Concerns of weakening US and Chinese growth and European instability have led to a drop in coal company share prices However, coal production levels and expansion investments remain robust on the back of continued emerging market growth.
German Chancellor Angela Merkel signed a resource trade deal in Mongolia last week in an attempt to smooth Mongolian mining political tensions while also seeking to secure Germany’s energy future.
In the wake of the turbulence surrounding Ivanhoe Mines Ltd share in Mongolia’s Oyu Tolgoi copper and gold mine, uncertainty remains as Mongolia aims to bring its massive untapped coal to the world.
With booming demand and a growing global community of market participants, coking coal swaps signal an evolution in the coal marketplace.
Various natural disasters, coupled with continued demand growth from emerging markets, have supported strong prices of both thermal and metallurgical coal markets in 2011, but expect prices to slide in Q4.
Monday, January 23, 2012