2016 could be remembered as one of the most outstanding years for solid fuel markets in history. 2015 was already a historic year, with the BP Statistical Review of World Energy reporting a -4.2% change in coal output in volume in 2015, the biggest year-on-year decrease in coal output in the Statistical Review. IEA records also indicate this was the biggest decrease since at least 1971.
It looks like things are getting even worse for coal markets in 2016, as the fast paced changes deepen further in the US and Chinese markets.
China’s accumulated growth rate in coal output in October 2016 was -10.7%, according to monthly data from the China National Bureau of Statistics (NBS). US coal mines are producing at a much slower pace than in 2015, showing a -26.3% growth rate in the first semester of 2016 compared to the same semester of the previous year. Weekly data for 2016 (unrevised) from the EIA shows a -21.6% growth rate versus (revised) 2015 data in the first 46 weeks of each year.
These statistics could lead to three historic events in coal production in 2016:
– The Chinese coal output could be at its lowest level in 2016 since 2009, if the current pace of slowdown in mining persists in the last four months of the year.
– With the massive slowdown in US coal production, India would become the second biggest coal producer in the world in 2016, a place that the US has held since 1984.
– We could witness yet another record-breaking slowdown in global coal output in 2016. Even if the rest of the world (excluding China and US) stabilise output, the global coal production growth rate for 2016 could be around or over -7%, crushing previous records. This would be a record-breaking growth rate even if Chinese output recovers and performs better than in previous months. If the rest of the world follows the decreasing trend, this slowdown could be even pronounced. This is an incredible shift with massive consequences for consumption, shifting fuel mixes, and CO2 emissions.
Since consumption is expected to follow these production patterns, a historic decrease in coal consumption appears likely. This, coupled with a scenario of low global energy consumption growth, is likely to mean lower CO2 emissions from fuel combustion in 2017 — an important and welcome result in light of the latest negotiations in Paris.