CIAB Market & Policy developments 2005/06 - IEA

112. The current low cost of CO 2 emissions permits has had limited impact on the running
regime for gas and coal generation in the UK. Phase 2 of the EU Emissions Trading
Scheme has seen a tightening of National Allocation Plan limits across the EU, leading
to higher market prices for CO 2 . This may deteriorate coal’s position, although the
seasonality of gas prices will remain an influence on the relative cost of coal and gas
generation.
3.2.3 Coking Coal Consumption
113. Table 2 shows IEA statistics for coking coal demand in the major world regions.
Table 2 - Coking Coal Consumption (million tonnes)
2004 2005 2006e
m.tonnes m.tonnes change m.tonnes change
EU(19) 81 76 -6.2% 78 1.9%
OECD 200 190 -5.1% 208 9.7%
World 597 635 6.4% 706 11.2%
© OECD/IEA, 2007
114. World demand for coking coal increased by approximately 11% in 2006, nearly twice the
increase in the previous year. Over 60% of the world growth was accounted for by China,
while OECD countries also showed a significant increase approaching 10%. Chinese
crude steel production grew by 21% to 423 million tonnes in 2006 and China now
accounts for 46% of world coking coal demand. As the following table shows, strong
world growth in steel production continued through 2007, with growth in China
moderating only slightly (nearly 16% in Jan-Nov 2007) and these trends will presumably
be reflected in the demand for coking coal.
Table 3 - Primary Iron & Steel Production (11 months to November)
Blast Furnace Iron (m. tonnes) Direct Reduced Iron (m. tonnes) Crude Steel (m. tonnes)
2006 2007 change 2006 2007 change 2006 2007 change
EU (19) total 101 102 1.0% 182 184 1.6%
OECD 261 265 1.5% 484 493 1.9%
World 794 861 8.4% 3 3 2.8% 1119 1205 7.7%
Source: International Iron & Steel Institute (IISI)
115. In Japan, crude steel production was 116 million tonnes in 2006, a 3.3% increase on
2005. This production increase is continuing, with the eleven months to November 2007
being 3.4% higher than in January-November 2006.
116. According to Japanese Trade Statistics, metallurgical coal (coking coal and PCI coal)
imports in CY2006 were 80 million tonnes, a 3.8% increase on CY2005 and in line with
the increase in crude steel production 6 . In CY2007, metallurgical coal demand is
expected to increase marginally as steel production increases.
117. Coking coal use in the United States of America declined again in 2006 to 23.0 million
short tons (metric: 20.9 million tonnes) despite an increase in steel production to 108.6
million short tons (metric: 98.5 million tonnes), 3.9% higher than in 2005. Nearly 57% of
steel was produced in electric furnaces, where most of the increase occurred. The steel
industry operated at an average 87.9% capacity throughout 2006. Apparent consumption
6 IEA figures show Japanese coking coal consumption increasing by 30%, while steam coal consumption decreases by
11%. This is due to anomalies in the classification of coal in initial estimates for 2006.
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