Sharp slump in coal demand seen

Worldwide consumption of coal is expected to lessen at the greatest extent since the global economy was disrupted by World War II, even in Southeast Asia which has been the most coal-hungry region, according to the International Energy Agency (IEA).

The Paris-based agency said coal-based electricity output— which accounts for two-thirds of total coal consumption—was set for a 10-percent dive, just two years after peaking in 2018.

The IEA said this was due to the response to the new coronavirus disease (COVID-19) pandemic, which has hampered industrial production and electricity use in most countries, as well as to competition from renewable energy sources.

“The size of the economic impact and the speed of recovery from it in the main coal-consuming jurisdictions will determine the ultimate size of the decline in global coal use in 2020,” IEA said in a report.

The biggest decline is expected in the United States at 25 percent and the European Union at 20 percent.

“In addition, the use of coal in power generation is squeezed by low-carbon generation, including hydro, wind, solar and nuclear power, which have been less affected by the COVID‑19 crisis,” IEA said. “Hence, differences in economic activity and the associated electricity demand have an outsized effect on coal-fired electricity generation and overall coal consumption.”

Even then, the agency said global coal use could decline only half as much if China—the world biggest consumer of electricity —and other large consumers of coal recover more quickly from the crisis.

“In some markets, coal demand may even grow if recoveries are faster, such as in Southeast Asia, driven by Indonesia and Vietnam,” IEA added.

In the Philippines so far, a big drop in coal prices and the impact of COVID-19 sent the first-quarter consolidated net income of Semirara Mining and Power Corp. (SMPC) falling 48 percent year-on-year to to P1.2 billion from P2.3 billion.

SMPC said in a regulatory filing a drop in global coal prices translated to a 16-percent decrease in average selling price of coal, which settled at P1,900 a ton from P2,272 a year ago.

Also, the company’s coal output went down by 22 percent year-on-year to 3.2 million metric tons from 4.1 mmt previously. INQ