Europe’s demand is declining as the region phases out coal, coupled with low natural gas prices that continue to outstrip coal's competitiveness. AME forecasts that European demand for thermal coal will drop to 96Mt in 2024, a 20% decrease compared to the peak in 2022.
Considering Colombia accounted
for around 30% of total exports to Europe in 2023, one might expect the supply
of Colombian coal to decrease in line with reduced demand from its largest
customer.
However, AME anticipates that Colombia will export around 61Mt of
coal in 2024, a 5% year-on-year increase as new buyers from East Asia are
expected to take advantage of its cheaper prices.
AME expects that there will be
increased demand for premium quality coal from other regions, as the supply of
premium thermal coal remains tight. This tightness is exacerbated by the
absence of additional supply from Australia, where strict regulatory hurdles
prevent new projects from coming online.
Why Colombian Coal?
The reason why Colombian coal
is favourable to Europeans is due to two main factors: quality and price.
Colombian coal is known for its high energy content and low impurities. It has
a high calorific value and is considered premium thermal coal, similar to that
produced in Australia. Thus, it is generally less carbon-intensive than the
low-calorific coal produced in Indonesia.