As I discussed last week, there’s been carnage in the coal sector of late. With major producers like Peabody Energy teetering on the brink of bankruptcy.
Reading the headlines, it appears the world has given up on coal as a commodity. Which made it all the more surprising the past week to see a major coal-positive announcement emerging from Southeast Asia.
That came from Vietnam. Where the government said it is going to require a massive amount of new coal supply — very quickly.
Platts broke the story that an official report last Friday projects Vietnam’s coal demand to rise by over 80% by 2020. With consumption expected to hit 86.4 million tonnes per year — up from 47.5 million tonnes demand estimated for 2016.
That’s an astonishing rise — equating to nearly 40 million tonnes of additional yearly demand. And vastly exceeding Vietnam’s domestic production, which ran just 41.5 million tonnes in 2015.
Officials are expecting domestic coal output to rise slightly — to between 47 and 50 million tonnes per year by 2020. But even with such growth, Vietnam would still be looking at imports of 35 to 40 million tonnes per year to meet overall demand.
Such a level of coal imports would be a massive increase from today. In 2015, Vietnam imported just 7 million tonnes of coal (although that figure was up 125% from 2014).
All of which suggests we could see imports here rise by over 30 million tonnes annually over the next few years. That’s not quite on the level of super-importers like China, Japan or India — but it would be very significant for the global market.
Of course, these are only forecasts at this point. But the scale of projected demand increases suggests that a major trend toward increased coal use is in motion across Vietnam. Whatever the final numbers, it appears assured the country is going to rocket to importance in terms of global coal buying.
Add that to rapidly rising coal demand in nearby nations like the Philippines, and supply could get tight fast in this part of the world. Watch for more data on growing demand and imports in this X-factor locale.
Here’s to being down but not out,