BHP predicts slight surplus in seaborne met coal supply during CY'25
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SXCoal: BHP, the global mining leader predicted that by 2025, the seaborne supply of metallurgical coal will see a slight surplus as production continued to recover. However, premium-grade coal is expected to remain in limited supply, according to their latest Economic and Commodity Outlook.
Despite some improvements in operations this year, BHP highlighted ongoing challenges in maintaining supply. Most new and planned projects are expected to yield mid- to lower-quality coals, while the quality of coals from older mines is gradually declining. The company stressed the need for new hard coking coal projects by the early 2030s to meet future demand.
In Queensland, Australia, regulatory changes have made the environment less conducive to long-term capital investments. BHP anticipates that these regulatory hurdles, along with supply constraints, could keep higher-quality coals in short supply, maintaining a price premium in the medium term.
Demand for metallurgical coal is varied across regions, with strong steel production growth in India and Southeast Asia counterbalancing declines in Northeast Asia. China's reliance on seaborne coal has decreased due to increased imports from Mongolia. As India emerges as the world's largest and fastest-growing importer of metallurgical coal, the country's role in the seaborne trade is becoming increasingly significant.
BHP noted that while prices for metallurgical coal have fluctuated over the past year, the volatility has been less severe compared to the early 2020s. After a price drop in early 2024, both iron ore and metallurgical coal have traded within relatively narrow ranges.
In 2023, China and India led global steel production, while output in developed regions continued to fall. BHP expects a moderate rise in global steel production through 2025, driven primarily by India and Southeast Asia, with some recovery in developed nations.
Looking ahead, BHP suggests that China's coal mining policies should focus on sustainable practices, particularly as the country pushes for decarbonisation in steelmaking. Utilising higher-quality coals at China's coastal steel mills could improve energy efficiency and reduce emissions, which is critical as China's steel industry advances its decarbonisation efforts.
This report has been written in accordance with an article exchange agreement between SXCoal and BigMint.
