Trade Flows and Derivatives Growth in the Global Coal Market
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The IEA / OPEC recently invited globalCOAL's CEO Eoghan Cunningham to speak on Trade Patterns in the Coal Market. Here's a copy of his presentation - it outlines of how the market is changing in these areas: - trade flows for seaborne thermal coal; - the market for coal derivatives; - coal market participants To learn more, visit www.globalcoal.com or drop a note to info@globalcoal.com
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Trade Flows and Derivatives Growth in the Global Coal Market
- 1. Trade patterns in the coal market Eoghan Cunningham, CEO - globalCOAL
- 2. For today’s discussion… • Changing trade flows • Changes in the derivatives market • Changing nature of market participants • Conclusions Copyright © by globalCOAL 2001 - 2014
- 3. Changes in trade flows
- 4. Areas experiencing change Europe Demand Stalling? Copyright © by globalCOAL 2001 - 2014 Australia New destinations Indonesia From zero to hero South Africa Looking to export Eastwards USA Looking to export to the Far East Colombia Europe’s supplier
- 5. Europe stalls… Atlantic vs Pacific Steam Coal Imports, 2005-2040 Copyright © by globalCOAL 2001 - 2014 1,600 1,400 1,200 1,000 800 600 400 200 0 2005 2010 2015 2020 2025 2030 2035 2040 Million tonnes Pacific Atlantic Sources: globalCOAL, Euracoal, IHS McCloskey
- 6. South Africa turns to the East Richards Bay Coal Terminal Thermal Coal Exports by Destination, 2005-2040 Copyright © by globalCOAL 2001 - 2014 Sources: globalCOAL, IHS McCloskey 100 90 80 70 60 50 40 30 20 10 0 2005 2010 2015 2020 2030 2040 Million tonnes Atlantic Pacific
- 7. South Africa turns to the East Richards Bay Coal Terminal Thermal Coal Exports to Key Asian Destinations, 2006-2014 Copyright © by globalCOAL 2001 - 2014 45 40 35 30 25 20 15 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014* Million tonnes Taiwan China India *2014 annualised from Aug’14 Sources: globalCOAL, IHS McCloskey
- 8. Australia diversifies Australian Thermal Coal Exports by Major Asian Destination, 2000-2014 Copyright © by globalCOAL 2001 - 2014 200 180 160 140 120 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Million tonnes China Taiwan South Korea Japan *2014 annualised from Aug’14 Sources: globalCOAL, IHS McCloskey
- 9. Where to for Indonesia? Growth of Total Indonesian Coal Exports, 2000-2040 Copyright © by globalCOAL 2001 - 2014 700 600 500 400 300 200 100 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 Million tonnes Sources: globalCOAL, IHS McCloskey
- 10. Where to for Indonesia? Indonesian Coal Exports by Product, 2000-2014 Copyright © by globalCOAL 2001 - 2014 Sources: globalCOAL, IHS McCloskey Lignite Sub-bit & other Bituminous *2014 annualised from Jun’14 450 400 350 300 250 200 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Million tonnes Sub-bituminous, Lignite & Other Bituminous
- 11. Where to for Indonesia? Indonesian Coal Exports by destination, 2000-2014 Japan Copyright © by globalCOAL 2001 - 2014 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% China 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* *2014 annualised from Jun’14 Sources: globalCOAL, IHS McCloskey South Korea Taiwan India & Pakistan Other ?
- 12. US prospects as a supplier Copyright © by globalCOAL 2001 - 2014 60 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Million tonnes Total US Coal Exports, 2001-2014 *2014 annualised from Aug’14 Sources: globalCOAL, IHS Evolution of US Coal Exports by Destination, 2005-2035 40 30 20 10 0 2005 2015 2025 2035 Million tonnes Pacific Atlantic
- 13. Copyright © by globalCOAL 2001 - 2014 Colombia Total Colombian Steam Coal Exports by Destination, 2000-2014 100 80 60 40 20 120 100 80 60 40 20 0 Europe 2000 2005 2010 2015 2020 2025 2030 2035 2040 Million tonnes 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Million tonnes Sources: globalCOAL, IHS Far East Americas *2014 annualised from Sep’14 Evolution of Colombian Coal Exports, 2000-2040
- 14. Changes in the derivatives market
- 15. 2014 derivatives market snapshot Copyright © by globalCOAL 2001 - 2014 API#2 2.5Bt API#4 500Mt API#8 34Mt NEWC 278Mt S/B Indo 18Mt
- 16. Significant growth in derivatives Growth in Coal Derivatives Volume, 2001-2014 Copyright © by globalCOAL 2001 - 2014 *2014 annualised from Sept’14 Sources: globalCOAL, ICE, CME, SGX, EEX, FSA, LEBA 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 * Million tonnes Δ+6.6%
- 17. Growth in clearing vs OTC Cleared and OTC Derivatives Volumes Growth, 2001-2014 Copyright © by globalCOAL 2001 - 2014 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% *2014 annualised from Sept’14 Sources: globalCOAL, ICE, CME, SGX, EEX, FSA, LEBA 4000 3500 3000 2500 2000 1500 1000 500 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 * % Cleared Million tonnes Cleared OTC % Cleared (right axis)
- 18. A maturing market Cleared Futures vs Options Derivatives Volumes, 2011-2014 Copyright © by globalCOAL 2001 - 2014 25% 20% 15% 10% 5% 0% 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2011 2012 2013 2014* % Options Million tonnes Futures Options % Options (Right axis) *2014 annualised from Sept’14 Sources: globalCOAL, ICE, CME, SGX, LCH
- 19. Atlantic Market Pacific Market 3,000 2,500 2,000 1,500 1,000 500 Copyright © by globalCOAL 2001 - 2014 Pacific lag Sources: globalCOAL, ICE, CME, SGX, LCH, Euracoal 3,000 2,500 2,000 1,500 1,000 500 0 Physical Financial Million tonnes 0 Physical Financial Million tonnes
- 20. Commodity churn ratios Various Commodity Churn Ratios Copyright © by globalCOAL 2001 - 2014 220 200 180 160 140 120 100 80 60 40 20 0 Pacific coal All coal Atlantic coal Cocoa Coffee Wheat Gas Oil Copper Crude Oil Henry Hub Gas Sources: globalCOAL & others
- 21. The changing nature of market participants
- 22. Financial institutions withdraw Percentage of globalCOAL Volume by Participant Type, 2006-2014 Rise of the commodity trader Utility Traders Miners & Others Copyright © by globalCOAL 2001 - 2014 Withdrawal of the Banks Source: globalCOAL 70% 60% 50% 40% 30% 20% 10% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014
- 23. Some conclusions… • As European demand stalls, trade turns towards growth markets in the East • Market preference for cleared derivatives increases as appetite for exposure to risk continues to decline • Pacific trade in derivatives continues to trail Atlantic Copyright © by globalCOAL 2001 - 2014 market • Changing nature of market participants as banks depart commodity markets and commodity traders increase activity
- 24. CONTACT US London +44 207 776 5900 Singapore +65 6311 4571 frontoffice@globalcoal.com
Editor's Notes
- Atlantic market financial includes CLEARED ONLY API#2 + 30% of API#4 Pacific market financial includes CLEARED ONLY NEWC/API#5, API#8, Sub-bit Indo + 70% API#4 API#4 split 30/70 on the basis of where phys is going
- % Asia-based in 2014 YTD = 11.9% 2013 = 5%