A new forecast from the Department of Industry, Science and Resources (DISR) predicts a decrease in global demand for metallurgical (met) coal as the steel industry shifts towards low-emission production methods. Despite this, Australia’s met coal export growth remains optimistic, though the department has historically overestimated export volumes.
The latest Resources and Energy Quarterly (REQ) report indicates that global demand for met coal is expected to decline as electric arc furnace (EAF) steel production increases, replacing coal-consuming blast furnaces. As EAF technology gains traction and the availability of alternative feedstock, such as scrap steel, rises, the demand for met coal could further decrease over the coming years.
The DISR anticipates Australian met coal exports will peak in the 2027-28 financial year. While this marks a lower forecast than previously expected, it still predicts a 13 million ton (Mt) increase by FY2029-30 compared to FY2024-25. Despite this projected growth, the forecast for thermal coal exports paints a different picture. The REQ suggests that Australian thermal coal exports will likely decline after 2025, with a decrease of 14Mt by FY2029-30, signaling that thermal coal exports may have already peaked.
Several factors could impact the forecast decline in Australia’s coal exports through 2030, including changing global market dynamics. While the REQ’s outlook for Australian met coal exports remains relatively positive, there are uncertainties about whether Australia can rely on its traditional export markets. The two largest markets for Australian met coal, Japan and India, together account for nearly half of the country’s exports. However, Japan’s shift towards electric arc furnaces and India’s growing reliance on domestically produced green hydrogen for steel production may reduce demand for met coal from these countries.
The REQ also points out that alternative met coal suppliers, including Russia and Canada, are expected to maintain stable export levels through 2030, although this assumption is uncertain. Moreover, Mongolian exports to China, which saw a significant increase from 2020 to 2024, are expected to decrease as China’s steel production declines. However, China’s growing import of anthracite, a high-carbon coal that Australia produces in limited quantities, could allow Mongolia to gain a larger share of the Chinese coal market. If this trend continues, Mongolia may displace other coal suppliers, putting downward pressure on Australia’s coal exports.
While Australia remains a key player in the global met coal market, the shifting dynamics in steel production, particularly in countries like India and Japan, and the increasing role of alternative coal suppliers could limit the growth of Australian coal exports. The upcoming years will likely see a transition towards cleaner, more sustainable methods of steel production, and Australia will need to adjust its coal export strategies to adapt to these changes.
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