Sjahrir noted that global demand could fall as low as 895 million tons ( Mt), 85 million tons lower than originally forecast, and 10% lower than the global demand recorded in 2019. This trend has hit some of the world’s largest coal consumers the hardest, with Indian demand falling by 40Mt and a decline of 10Mt in China and South Korea.
“There is a possibility for further downside to these demand numbers, if lockdowns are extended or reinstated,” said Sjahrir, speaking at a webinar held on Wednesday, and reported by Montel News. “The oversupply situation could worsen should we witness further demand destruction due to lockdown extensions.”
The economic danger posed by prolonged lock-down policies is of particular concern, since many of the world’s largest coal producers are among the hardest affected by the pandemic. In 2018, BP figures show that China dominated the world’s coal production, with 1,828.8 million tons of coal produced, accounting for 46.7 percent of the global total; the latest figures suggest that China has the 18th-most Covid-19 cases, with more than 80,000. Likewise, the US leads the way in Covid-19 cases, with more than two million people affected, and was the second-largest coal producer in 2018, with 364.5 million tons of production behind China alone.
It is no surprise that countries with large industrial workforces, where large numbers of workers are forced to work in confined or enclosed environments, such as mines, are among the most impacted by Covid-19, although the impacts on Chinese and American coal are having implications around the world.
Sjahrir noted that Indonesia, which reported just 34,000 cases of Covid-19, had its coal industry thrown into disarray as a result of a global recession, with half of the country’s coal mines now running at a loss. Nonetheless, the country’s energy ministry set its June reference price for coal at $52.98 per tonne, a 35 percent decrease since the beginning of the year, calling into question the long-term stability of the market.
