The Decline Of The Coal Industry Is “Long-Term” And “Irreversible”

Thursday, February 18, 2016
By Paul Martin

By Nick Cunningham
OilPrice.com
Wed, 17 February 2016

Demand for thermal coal is declining, a trend that appears to be “irreversible.”

That is the conclusion from Goldman Sachs, which published a new report on the global coal and gas trade on February 15, and reported on by SNL. For coal producers, this is the latest in a long line of grim warnings, all of which point to a future of shuttered power plants, mine closures, and bankruptcies.

Last fall, Goldman Sachs made headlines when it predicted that “peak coal” was drawing near. “The industry does not require new investment given the ability of existing assets to satisfy flat demand, so prices will remain under pressure as the deflationary cycle continues,” the investment bank wrote in September 2015.

The reaffirmation of that belief in its latest report will make less of a splash, if only because there is a growing realization that the coal industry is dying. Nevertheless, Goldman offers some new insights about the direction for the industry.

For much of the last decade, with coal consumption flat or declining in most of the industrialized world, there was still a massive lifeline for coal producers. China’s explosive growth led to a seemingly endless appetite for coal, despite bleak and deteriorating air quality in many of its cities. But, after years of blistering growth, China’s coal burning came to a screeching halt, likely hitting a peak in 2013.

With China’s coal market hitting a peak and entering decline, India is supposed to take over as the last vestige of growth. In the IEA’s 2015 World Energy Outlook, it published a lengthy section on India, placing it front and center as the single most important country to watch in terms of its influence on the future of energy markets.

The Rest…HERE

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