Coal exporters should brace for disappointment

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The world’s largest thermal-coal exporter is eyeing new markets as its largest export destinations threaten to cut imports. Indonesia is targeting Bangladesh, Pakistan and Vietnam as China and India seek to curb thermal-coal imports into the long term.

As a result, Australian and South African thermal-coal exporters aren’t going to have it all their own way in seeking increased deliveries to markets such as Vietnam. Furthermore, it looks increasingly like Vietnam, Bangladesh and Pakistan are going to disappoint those hoping for more demand growth from these countries.

A key problem faced by thermal-coal exporters in Australia, Indonesia and South Africa is that China and India are increasingly prioritizing their own very large domestic coal-mining industries. Both nations are keen to reduce imports as much as possible for energy-security reasons and to protect domestic jobs.

Other established coal export destinations are also likely to reduce imports in the long term. 

South Korea has been the third-largest thermal-coal export destination for Australia, Indonesia and South Africa. However, this month President Moon Jae-in announced that 30 coal-fired power plants will be closed by 2034 and wind and solar capacity tripled by 2025.

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