Australian rail operator Aurizon said in its fiscal year 2020 (July to June) results report on Aug. 10 that Asian coal-fired power consumption is expected to remain robust and Australian thermal coal exports continue to be competitive among seaborne consumers.
Aurizon is Australia's largest rail freight operator moving commodities such as coal and iron ore across the nation.
"99% of Australian exports are destined for Asia. It is this region, rather than global consumption, that is projected to use coal-fired generation assets for a prolonged period," said Aurizon.
In addition, the company said Australia's thermal coal competitiveness is driven by coal quality characteristics and geographic proximity to Asia.
In FY 2020, Australia exported 213 million mt of thermal coal to Asian countries, the report said.
There were 74 million mt and 52 million mt of thermal coal exported to Japan and China, respectively, followed by 32 million mt to South Korea, 23 million mt to Taiwan, 29 million mt to other parts of Asia including Vietnam, and 3 million mt to the rest of the world, the report said.
The FY 2020 figure was up 14.1% from the year ago figure, data from the report showed.
"The fundamentals of Australian metallurgical and thermal coal remain strong, driven by steel and energy demand in Asia, supporting coal export growth of 1%-2% per annum over the next decade," the report said.
S&P Global Platts Analytics remains optimistic that bituminous coal import demand in Asia will be more resilient through to the end of 2020.
"The price differential between high and mid-CV coal prices is small enough for customers to consider higher energy coal rather than a reliance on cheaper sub-bituminous coal," said Matthew Boyle, lead coal analyst at Platts Analytics.
The price of FOB Newcastle 5,500 kcal/kg NAR coal with 23% ash was assessed at $36.25/mt on Aug. 7, down 30.6% since the beginning of this year, Platts data showed.
Coal operations
On the transport and operational front, Central Queensland Coal Network (CQCN)'s volume dipped on the year, the report said.
CQCN is Australia's largest export rail network, comprising four major coal systems and one connecting system, which connects more than 50 mines to five major export ports, as well as many domestic consumers.
Owned by Aurizon, the network transported 227 million mt of coal in FY 2020, down 2% from FY 2019, the report said.
As of June 30, 214 million mt of coal were hauled, largely stable on the year, with 58% of it being thermal coal, Aurizon estimated.
Due to the coronavirus pandemic impacting demand, the outlook for coal volumes is around 210 million-220 million mt, while CQCN volumes are expected to be below 239 million mt in FY 2021, the report added.
