PH seen as key market pushing coal demand growth

HANOI, Vietnam – With many of its greenfield coal plant projects coming on stream between next year until year 2021, the Philippines is seen among the key markets in Asia that will propel coal demand growth.

This has been highlighted by Noble Energy Director Gerry Feerick, with him stressing that the Philippines will be joining the league of other Southeast Asian markets of which demand for coal will be on uptrend moving forward.

For these energy markets, he further indicated that the main concern shall be on securing long-term contracts that will fit the need of their respective power fleets as well as the cost sensitivity of consumers they serve.

“We see growth in the Philippines, we see growth in Malaysia, Vietnam and Indonesia,” the Noble executive stressed; while emphasizing that each market will also have specific concerns to address.

The Philippines in particular will have shored up demand for coal because many of the new electricity generating assets of the country are from coal technologies. This market is specifically dependent on coal imports – mainly from Indonesia and Australian suppliers.

On the whole though, Feerick noted that the sphere of major concern will certainly be “on the long-term aspect of buying coal – and that applies to Philippines, Vietnam or Indonesia and even Malaysia… I think that’s important to understand.”

He asserted “there are nice suppliers (of coal), but you have to find the people who could offer you solutions on a long-term basis… how the quality is managed and how the logistics is organized.”

On pricing, it is projected that the per metric-ton cost of thermal coal for power generation would already be on stabilization mode, according to Sujogya Kumar Dash, managing director of XCoal Energy and Resources.

For coking coal, which is generally used by industries such as steel, it was noted that the forward curve will likely be sustained at US$160 per metric ton through year 2021.

It has been emphasized that “global supply will continue to inch higher, but limited large scale projects will deliver meaningful tons in the next 12-24 months,” Dash said.

He added that over the longer term, “global supply has potential to react in more meaningful way to sustained pricing above US$150 per metric ton.”