COAL SUPPLY & DEMAND Fumiaki Iwahashi General Manager, Coal Div. Mitsui & Co., Ltd. ABSTRACT Originally, coal is a commodity with strong PRODUCE LOCALLY AND CONSUME LOCALLY character. i.e.) World Coal Production Approx. 5,400 Mil. MT (2007, excluding lignite) out of the above) Internationally Traded Volume Approx.800 Mil. MT (approx 15% of total production) IEA (International Energy Agency) predicts that the world s total coal production and consumption will increase by about 1,600 Mil. MT from 2007 to 2015, approx. 7,000 Mil. MT. At a glance, it seems that production and consumption are roughly in balance, but the real trend is that the supply capacity expansion is chasing after strong demand. The internationally traded volume is equally expected to increase from 800 Mil. MT to the 1,100 Mil. MT level. Both the production and the consumption volume of China, US, and are approx 3/4 th of the world total. The key factors in the near future will be the increase in demand in China and and the supply capacity of Australia and Indonesia. In 2015, production and consumption will almost balance in China and US whereas the forecasts for anticipate that consumption will outstrip production on a large scale. With regard to China, the demand for steam coal, centering on use in the electricity sector, will see substantial increase. Steam coal demands for coal-fired thermal power generation will be vigorous not only in China and but in all parts of the world (Southeast Asia, Europe, North America, Middle East, etc.) The way these programs progress will have an impact on the supply and demand situation. Similarly, the expansion of demand for coal for coking coal mainly in China and will need a close watch in much the same way as for steam coal. L-2-1
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要 約 元 々 石 炭 は 地 産 地 消 の 性 格 が 強 い 商 品 i.e. 世 界 の 石 炭 生 産 約 54 億 トン (2007 年 褐 炭 を 除 く) うち 国 際 貿 易 量 約 8 億 トン ( 全 体 の 約 15%) IEA(International Energy Agency) 予 想 では 全 世 界 の 石 炭 を 2007 年 から 2015 年 にかけて 生 産 も 消 費 も 約 16 億 トン 増 加 し 約 70 億 トンと 予 測 している 一 見 すると 生 産 と 消 費 はほぼバランス しているが 実 際 の 動 きとしては 旺 盛 な 需 要 を 供 給 力 の 拡 張 が 追 い 掛 けていく 形 国 際 貿 易 量 は 同 様 に 8 億 トンから 11 億 トン 台 への 増 加 が 見 込 まれる 生 産 量 消 費 量 とも 中 国 米 国 インドで 世 界 の 約 3/4 を 占 める 近 い 将 来 のキーは 中 国 とインド の 需 要 の 伸 び 及 び 供 給 サイドでの 豪 州 とインドネシア 2015 年 には 中 国 と 米 国 は 生 産 と 消 費 がほぼ 拮 抗 する 一 方 インドは 消 費 が 生 産 を 大 幅 に 上 回 る 見 通 し 中 国 については 電 力 用 を 中 心 とした 一 般 炭 の 需 要 の 伸 びが 大 きいと 予 想 される 石 炭 火 力 発 電 向 け 電 力 炭 需 要 は 中 国 インドのみならず 世 界 各 地 ( 東 南 アジア 欧 州 北 米 中 東 など)で 旺 盛 であり これら 計 画 の 進 捗 が 需 給 状 況 に 影 響 する 原 料 炭 に 就 いても 一 般 炭 同 様 中 国 インドを 中 心 とした 需 要 の 伸 びを 注 視 する 必 要 がある L-2-3
COAL SUPPLY & DEMAND September 4, 2008 Mitsui & Co., Ltd. F.Iwahashi September, 2008 1 COAL from the viewpoint of Business Ample Reserves Confirmed 1 Trillion MT Recoverable about 160-200Years Oil:40 Yrs Gas: 60 Yrs Produced all over the world - Local Consumption of local products - Production 5,400Mil.MT(2007) Overseas Trade 800Mil.MT (15%) * Excluding Brown coal Competitive Price Calorific Value Basis CIF Price/Kcal Coal : Gas : Oil = 1 : 2 : 3 (2006 Statistics) Variable Usage 1 Cokes Materials 2 Fuel 3 Coal-Chemical, IGCC, For H2 Production etc. To add values as Environmentally-Friendly Coal CO2 Separation, CCS Technology etc. September, 2008 2 L-2-4
Global Coal Supply & Demand Supply Demand (mln t) Indonesia 214 Australia 319 Others 879 USA 1,048 2007 5,395 410 China 2,525 Balance (2007) China +19-56 USA +8 Australia +247 Indonesia +176 Others -379 Total +15 Indonesia 38 Australia 72 Others 1,078 USA 1,040 Japan 180 2007 5,380 466 China 2,506 Indonesia 310 Australia 508 Others 1,238 USA 1,048 2015 7,047 622 China 3,321 Balance (2015) China +47-215 USA -10 Australia +401 Indonesia +210 Others -445 Total -12 Indonesia 100 Australia 107 Others 1,502 USA 1,058 Japan 181 2015 7,059 837 China 3,274 September, 2008 3 September, 2008 4 L-2-5
September, 2008 5 Supply & Demand in general - Asia After Year 2000, about 80Mil.-100Mil.Tons of Coal Exportability has been decreased in Asia China/ Infrastructure Problems (Capacity of Railway & Port Facility) in Australia Demand will be increasing, while increased export capacity will mitigate the situation (to some extent?) September, 2008 6 L-2-6
China & 2000-2007 Milt China Net Export n Import 100 90 80 70 60 50 40 30 20 10 0 (kt) China year export import Net export import 2000 54,992 2,116 52,876 21,000 2001 89,928 2,493 87,435 20,700 2002 83,810 10,664 73,146 23,100 2003 93,885 10,761 83,124 21,400 2004 86,657 18,611 68,046 28,400 2005 71,676 26,171 45,505 37,100 2006 63,235 38,244 24,991 45,300 2007 53,092 51,016 2,076 51,300 2000 2001 2002 2003 2004 2005 2006 2007 Source: Trade Statistics of China, Coal Information 2004, 2005, and 2007, and Port Information () September, 2008 7 (mln t) 1400 1200 1000 800 600 400 200 0 Seaborne Coal Volume & Balance Total Demand 2007 2008 2009 2010 2011 2012 2015 Metallurgical Coal Supply Thermal Coal Supply (mln t) 900 800 700 600 500 400 300 200 100 0 Thermal Coal 2007 2008 2009 2010 2011 2012 2015 (mln t) 350 300 250 200 150 100 50 0 Metallurgical Coal 2007 2008 2009 2010 2011 2012 2015 September, Australia 2008 Indonesia Others Demand Australia Canada Others Demand 8 L-2-7
Seaborne Coal Volume & Balance 2007 2008 2009 2010 2011 2012 2015 Met Coal Supply 206 221 236 254 273 284 305 Australia 126 136 149 158 173 183 201 Canada 27 29 30 30 30 30 30 Others 53 56 57 66 70 71 74 Thermal Coal Supply 642 657 681 692 714 729 820 Australia 121 124 133 136 140 145 200 Indonesia 174 180 185 189 191 195 200 Others 347 353 363 367 383 389 420 Total Supply 848 878 917 946 987 1,013 1,125 Met Coal Demand 214 223 236 252 273 289 315 Thermal Coal Demand 674 704 723 744 759 781 853 Total Demand 888 927 959 996 1,032 1,070 1,168 Met Coal Balance -8-2 0 2 0-5 -10 Thermal Coal Balance -32-47 -42-52 -45-52 -33 Total Balance -40-49 -42-50 -45-57 -43 Remark: Seaborne coal supply of 2007 (848 mln t) accounts for only 16% of the global production of the same year (5,395 mln t). This is because large producing countries, such as China (2,525 mln t), USA (1,048 mln t) and (410 mln t), consume the most part of one s coal production. September, 2008 9 World Primary Energy Consumption by Region, 1971-2030 Million tons Oil Equivalent Annual Growth Rate 1971-2004 2005-2030 World 2.2% 1.7% Asia 4.7% 2.8% North America 1.2% 1.0% Asia North America Europe (OECD) Europe (Non-OECD) South America September, 2008 10 2030 Sources: Institute of Energy Economics Japan, International Energy Outlook 2007 (EIA) Middle East Africa Oceania World primary energy consumption is projected to increase by 56% from 2004 to 2030. The most rapid growth in energy consumption is projected for nations in Asia, mainly and China. Total energy demand in the non-oecd countries increases by 95%, compared with 24% in the OECD countries L-2-8
World Primary Energy Consumption by Fuel Type, 1971-2030 Million tons Oil Equivalent Annual Growth Rate 1971-2004 2005-2030 Oil 1.5% 1.5% Coal 2.0% 1.6% Natural Gas 3.0% 2.1% Total 2.2% 1.7% Renewable Nuclear Oil Use of nuclear power, hydroelectricity and other renewable energy sources is expected to continue to Sources: Institute of Energy Economics Japan, International Energy Outlook 2007 (EIA) expand, but their share of total world energy consumption is September, 2008 11 expected to be rather limited. Coal Natural Gas Hydroelectricity Fossil Fuels (oil, natural gas and coal) are expected to continue to supply much of the energy used world wide, providing 88% of world energy consumed from 2004 to 2030. Coal is the growing energy source worldwide for the industrial sector (including the steel industry) and electric power sector, largely because of its ample reserves and cost competitiveness. Coal - Indispensable and Competitive Energy Source for Electricity Generation Replaced by Nuclear, Wind and Solar in the near future? Nuclear: There are many plans to build new nuclear power plants. But, the lead time between deciding to build a nuclear power station and actually building / commissioning would be in the range of 10 20 years. Key equipment for nuclear power plants such as reactors and reactor coolant pumps are currently produced by only one machinery maker in Japan, and supply of such key equipment is expected to be the bottleneck for new nuclear power plant. Wind and Solar : Higher CAPEX and vast site area required. - CAPEX for a 1,000MW Power Station Oil & LNG US$ 1.0 billion Coal US$ 1.2 billion Nuclear US$ 5.0 billion Windmill US$10.0 billion (requiring 246 square kilo meters) Solar battery US$60.0 billion (requiring 67 square kilo meters) September, 2008 12 L-2-9
China and - Electricity Consumption- Net Electricity Consumption per capita ( KWh ) 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 303 China Japan United States 477 6,161 11,169 485 1,286 1,194 4,129 September, 2008 13 7,391 12,608 9,358 1990 2003 2030 15,395 Source : International Energy Outlook 2006 / Energy Information Administration China still has a lot of potential to increase its energy consumption, still being 1/5 of Japan s as of 2003 and projected to expand more than 3 times by 2030. is rapidly catching up, having even more potential than China over the long run as its population is expected outstrip that of China within a few decades. INDIA -Coal Demand- Our estimate of thermal coal import CY07 29Mt CY10 46Mt CY15 143Mt n government initiates Ultra MW Projects (4,000MW x 9). 5~6 projects will use import coal (approx.70mt) demand during CY11~17. 15 other projects for import coal by CY13. Another 30mt demand increase. Power plants designed for high energy foreign coal. Red point : Ultra MW project (using import coal) Yellow point : Ultra MW project (using domestic coal) Green point : Existing coal-fired plants Green-colored area : Main coal production area Coastal based boilers expected to use import coal mainly due to high rail freight. D istan ce(km ) O ne w ay P er 1 00kg(R s) U SD pe r ton ne 0-10 0 2.7 11.68 200 19.75 4.6 300 27.54 6.4 400 35.28 8.1 500 43.15 9.9 611 52.48 1 2.1 September, 2008 750 63.21 1 4.6 14 1,000 82.87 1 9.1 1,250 102.68 2 3.7 L-2-10
World Traded Volume Thermal Coal (Mil t) 950 Confidential World Total Demand World Total Supply 850 750 650 China Others 550 2007 2008 2009 2010 2011 2012 2015 Others (demand) China (demand) (demand) Total Supply (CY) Source: AME Export Thermal Coal 2008, IEA Statistics Coal Information 2007, EIA World Energy Outlook 2007, Mitsui Research Team September, 2008 15 Apparent Steel Use per capita ( kg ) 700 600 500 400 664 440 China and - Steel Production - 618 269 397 China Japan United States 300 43% of the Chinese population is living in urban area mainly along the coastal. 200 In Chinese urban areas, apparent steel use 28 92 39 63 per capita has already reached 626 kg 100 the same as Japan. That is why we estimate that China growth 0 as a whole will slow down from now until 1996 2006 2015 their Government 2030 succeeds in its Go-West campaign. So far during this decade, Chinese growth in apparent steel use per capita has been much higher than its growth in energy consumption, being half of Japan s as of 2006. While it still has potential for further growth, the rate of growth is expected to be more subdued. has just started to grow, having great potential for further sharp growth. Source : World Steel Dynamics / International Energy Outlook 2006 / Mitsui s estimate September, 2008 16 617 385 369 L-2-11
(Mil t) 500 World Traded Volume Metallurgical Coal World Total Demand World Total Supply 400 300 200 Others 100 2007 2008 2009 2010 2011 2012 2015 (CY) Others (demand) China (demand) (demand) Total Supply Source: IISI Medium Term Outlook, IEA Statistics Coal Information 2007, Barlow Jonker Coal Supply Series, Mitsui Research Team September, 2008 17 L-2-12
いわはし 氏 名 : 岩 橋 ふみあき 史 明 学 歴 : 1978 年 3 月 一 橋 大 学 社 会 学 部 卒 業 職 歴 : 1978 年 4 月 三 井 物 産 株 式 会 社 入 社 石 油 部 1986 年 7 月 三 井 物 産 エネルギー 部 門 海 外 研 修 員 (ロスアンゼルス ニューヨーク ロンドン) 1987 年 7 月 三 井 物 産 炭 素 部 1989 年 2 月 米 国 三 井 物 産 ロスアンゼルス 支 店 エネルギー 部 アシスタント ゼネラル マネージャー 1993 年 2 月 三 井 物 産 石 油 貿 易 部 課 長 代 理 1994 年 10 月 同 課 長 1995 年 9 月 三 井 物 産 業 務 部 経 営 企 画 室 1998 年 9 月 三 井 物 産 エネルギー 事 業 部 事 業 第 二 グループ 主 席 2000 年 3 月 出 向 三 井 石 油 開 発 事 業 部 担 当 部 長 2002 年 7 月 三 井 物 産 石 油 資 源 開 発 部 次 長 2003 年 7 月 三 井 物 産 石 油 貿 易 部 次 長 2005 年 5 月 豪 州 三 井 物 産 株 式 会 社 パース 支 店 長 2007 年 11 月 三 井 物 産 エネルギー 第 一 本 部 石 炭 部 2008 年 5 月 三 井 物 産 エネルギー 第 一 本 部 石 炭 部 長 Fumiaki Iwahashi Education: 1978 Graduated from Hitotsubashi University (Faculty of Social Science) Career: 1978 Joined Mitsui & Co., Ltd. (Tokyo) Petroleum Div. 1986 Took Mitsui-Energy Overseas Training Course (Los Angeles, New York, London) 1987 Mitsui & Co., Ltd. (Tokyo), Carbon Div. 1989 Mitsui & Co. (U.S.A) Inc. Los Angeles Office, Assistant General Manager of Energy Div. 1993 Mitsui & Co., Ltd. (Tokyo), Assistant General Manager of Petroleum Trading Div. 1994 Mitsui & Co., Ltd. (Tokyo), General Manager, Naphtha Dept. Petroleum Trading Div. 1995 Mitsui & Co., Ltd. (Tokyo), Chief Strategist, Corporate Planning Div. 1998 Mitsui & Co., Ltd. (Tokyo), General Manager, Business Dept. Energy Project Div. 2000 (Secondment) Mitsui Oil Exploration Co., Ltd., General Manager, Business Div. 2002 Mitsui & Co., Ltd, (Tokyo), Deputy General Manager of E&P Div. 2003 Mitsui & Co., Ltd. (Tokyo), Deputy General Manager, Petroleum Trading Div. 2005 Mitsui & Co. (Australia) Ltd., General Manager of Perth Office 2007 Mitsui & Co., Ltd. (Tokyo), Coal Div. 2008 Mitsui & Co., Ltd. (Tokyo), General Manager of Coal Div. L-2-13