Asia-Pacific Coal Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Asia-Pacific coal market is expected to grow at a CAGR of more than 3% during the forecast period. Factors such as increasing power generation capacity plans and increasing electricity demand, particularly in China and India, owing to rapidly increasing industrial and infrastructural development activities, are expected to drive the market during the forecast period. However, the uses of coal are squeezed out of the energy mix in many developed nations, the reason being the generation of air pollutants due to coal combustion. Moreover, power from coal is getting mixed up with other alternative sources, like renewables and natural gas, which help to reduce the environmental impact as compared to coal. These factors, in turn, are expected to restrain the growth of the Asia-Pacific coal market.

Key Highlights

• Coal is extensively used in the region to fire the thermal power stations and in turn meet the demand for various sectors, such as industry, transport, residential, commercial, and public services. The power stations segment is expected to dominate the market supported by China’s extensive plan for adding additional coal-fired plants during the forecast period.
• With the growing demand for electricity, coal power plants in the Asia-Pacific region is expected to be a significant consumer of coal. The region is expected to have a demand of around 4,400 mega ton of coal equivalent by 2040, with majority of demand from the power sector. This demand for coal is expected to create an opportunity for the market players in upcoming years.
• China is expected to be the largest market and fastest growing market, owing to the country being the global leader in terms of total number of coal fired power plants. Further, China continues to advocate for a capacity target in the upcoming five-year plan that would make room for up to 200 new coal-fired generating units by 2025.

Key Market Trends

Power Stations Segment to Dominate the Market

• In 2019, Asia-Pacific accounted for more than 77% of the global share in the total coal consumption, and about 47% of primary energy consumption in the region was attributed to coal.
• Further, of the new coal-fired power plants commissioned in 2019, nearly two-thirds (64%) of the newly commissioned capacity was in China (43.8 GW) and 12% in India (8.1 GW), with the remaining 24% located mainly in Malaysia (2.6 GW), Indonesia (2.4 GW), and Pakistan (2 GW).
• Currently, about half of the capacity currently under construction is in China (99.7 GW), followed by 18% in India (37 GW), 6% in Indonesia (11.8 GW), and 5% in Japan (9.3 GW). Hence, with Asia-Pacific countries majorly increasing coal consumption globally, the market is expected to be driven during the forecast period.
• Although commissioning increased in 2019, the pipeline for new commissioning is showing signs of a slowdown. Southeast Asia which is likely to be the next center for coal plant development, construction starts there have fallen over 85%, from 12.8 GW in 2016 to 1.8 GW in 2019.
• In India, capacity in pre-construction development halved in just the past year: from 60.2 GW in 2018 to 29.3 GW in 2019, with only 2.8 GW newly proposed in 2019, less than Turkey.
• Moreover, Japan started construction on 1.8 GW of coal power in 2019 and commissioned 1.3 GW of new coal power. Japan is the only Group of Seven (G7) country adding to its domestic coal power capacity and is facing pressure from the G7 group to cut down on its coal consumption in line with Paris agreement.
• - Although, there are several restrains in the Asia-Pacific leading to decreased use of coal, many countries are still continuing construction of coal power plants, led by China, India, and Indonesia, in turn, bolstering the market growth in the region.

China to Dominate the Market

• China has witnessed high rates of demand for electricity, owing to the unprecedented growth of the economy, coupled with factors, such as rapid industrialization and urbanization electricity. The robust economic growth in China reached nearly 7%, and the gross electricity consumption grew by 6.6%, exceeding 6,000 TWh, for the first time in 2017.
• Utilities and governments in China are developing new generation projects to meet the rising electricity demand. At over 1,000 GW, China constitutes about half of all global coal power capacity, and 41% of global capacity under construction and in pre-construction development (205.9 GW).
• In China, the amount of capacity in pre-construction development has also increased as the central government began placing restrictions on new coal plant proposals and permits in 2016. The increase is due to the power industry in China continuing to advocate for a capacity target in the upcoming five-year plan that would make room for up to 200 new coal-fired generating units by 2025.
• Therefore, China’s continued pursuit of new coal power is expected to drive the ongoing expansion of the global coal fleet, in turn, leading to exponential growth of the market in the Asia-Pacific region.

Competitive Landscape

The Asia-Pacific coal market is fragmented. Some of the key players are China Coal Energy Group Co., Ltd., China Shenhua Energy Co. Ltd., Huadian Power International Corporation, NTPC Ltd, and Jindal Steel & Power Ltd.

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