Old King Coal will stay on the commodities throne for years
Waking up to a stocking full of coal is probably not the most exciting start to a Christmas morning. But at least it's got a better chance of increasing in value by next year than a Wii Fit or a Zhu Zhu Pet.
Rowena Mason, City Reporter (Energy)
6:16PM GMT 27 Dec 2009
Green problems with coal have not tarnished its prospects as a 'key fuel for the future' Photo: Reuters
There are many dismissing coal as the unwanted black sheep of the fossil fuel family, blamed for 40pc of the world's carbon dioxide emissions that contribute to global warming.
But in defiance of environmental concerns, there has been little sign that any fall off in coal demand this year is due to anything other than the recession.
Analysts from JP Morgan reckon that thermal coal, used in power stations, will rise from $70 to $85 per tonne next year, based on rebounding demand from China and India. While global inventories have been unusually high in the downturn, the bank believes stocks may decline from 40m tonnes this year to 22.7m in 2010.
"Supply will be tight in the next two years," said Stevanus Juanda, a mining analyst. "In the second half of 2009, we have observed sizeable imports of coal by China, due to the closure of mines in the Shanxi region and rise in electricity generation."
Experts are also predicting a shortage in coking coal used to make steel over the next year, driven up 12-fold by demand from China.
Macquarie, JP Morgan and Morgan Stanley estimate that prices may jump by between 23pc and 38pc in 2010, as global demand rebounds.
And the International Energy Agency believes that coal will account for 29pc of global energy needs in 2030, compared with 26pc in 2006. For Deloitte's energy consultants, this all goes to show that green problems with coal do not yet tarnish its prospects as a "key fuel for the future".
Listening to the political leaders at the Copenhagen climate change conference, you could be forgiven for imagining that the world was about to be seized with a Thatcherite fervour for closing down the mines.
That was the political rhetoric. But the summit failed to reach agreements on targets for lowering emissions and how they should be financed – mostly because burning coal is still in the national economic interest of most developing countries.
In the aftermath of the Copenhagen chaos, Western politicians have been blaming China and India for sabotaging the talks. If true, it is hardly surprising that they want to resist curbs on the predicted growth of their emissions, largely based on soaring use of coal.
The Copenhagen accord may have been vaguely worded, but its implications for commodities are clear: businesses still have little incentive to invest in more expensive renewables and nuclear power while coal and gas are cheaper.
Europe has decided to start closing coal plants without "carbon capture" facilities and China is keen to get its hands on this future technology, but the fact remains that old coal stations are still being built at the rate of one a day.
With "clean coal" technology unlikely to be commercial for another decade, it at least remains a helpful myth for politicians and companies to justify continued investment in the commodity.
August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 September 2016 August 2016 July 2016 June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014 December 2013 November 2013 October 2013 September 2013 August 2013 July 2013 June 2013 May 2013 April 2013 March 2013 February 2013 January 2013 December 2012 November 2012 October 2012 September 2012 August 2012 July 2012 June 2012 May 2012 April 2012 March 2012 February 2012 January 2012 December 2011 November 2011 October 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 September 2009 August 2009 July 2009 June 2009 May 2009 April 2009 March 2009 February 2009 January 2009 December 2008