Coal

Coal Global Market Outlook

• The global demand for coal in 2021* was estimated to be 160.10 exajoules. It is expected to grow in 2022 because of ongoing geopolitical events, despite its emission issues

• Due to the COVID-19 pandemic's effect, the overall coal demand increased by 6.3 percent in 2021 after falling by 4.4 percent in 2020 to 151 exajoules

Industry Structure and Outlook

Global Supply and Demand

• The total coal demand has increased by 6.3 percent in 2021 after a 4.4 percent drop in 2020 to 151 exajoules, due to the impact of the COVID-19 pandemic

• The total coal production has reached the record-breaking highest level, with 5.9 percent growth in 2021 at 167.58 exajoules

• APAC is a major producer and consumer of coal globally

• The industrial sector leads the sector-wise consumption with 32.5 exajoules, followed by the commercial sector and non-energy use with 2.5 and 2.1 exajoules, respectively

Porter’s Five Forces Analysis: Coal

• Suppliers have an upper hand in the coal market, owing to the limited presence and barriers for new suppliers to enter the market.

• Buyer power is limited, due to the limited options available to fulfil demand obligations.

Supplier Power

• The supplier power in the global coal market is relatively high, due to the geographical constraints in production

• Only limited suppliers own coal productions

• Tight regulations and higher CAPEX reduce competition, and thereby, increases supplier power for existing players

Buyer Power

• Buyer power is medium, as it varies from region to region

• Strong demand from power plants located near to coal mines has higher buyer power over the supplier

• On a global scale, buyer power is medium, as the coal-based generation demand is not easily replaceable from other commodities. Hence, buyers usually have lower power over suppliers, due to demand obligations

Barriers to New Entrants

• Barriers to the new entrants are high in the coal market, owing to the stringent environmental and emission policies in mining

• The high capital and logistical challenges too reduce the attractiveness for new players

Intensity of Rivalry

• Intensity of rivalry is usually low, as the competition is limited and existing buyers have long-term sourcing contracts with limited sports purchases and trades

• With less number of operators functioning in a particular region, competition at the production is limited as well

Threat of Substitutes

• Threat of substitution is relatively higher, as the current policies do not favor coal-based energy, due to the associated emissions

• Although direct substitution is possible from biomass, which is limited on a global scale, increased natural gas and renewable energy generation capacities pose a significant threat to coal demand