wWwww WWorld Coal Trade The world coal market is a global industry, with coal produced in more than

50 countries and consumed in over 70 countries. The large number of coal suppliers that are active on the coal market and the ease of transportation by rail or by sea ensure efficient and competitive functioning of the global coal market. Global Coal Production and Trade in 2011

Source: Euracoal; VdKI 2012; Dr. Lars Schernikau Economics of the International Coal Trade. The Renaissance of Steam Coal, Springer, 2010.

The dynamics of the global coal trade trade are best portrayed by the following numbers: The coal market has risen from 357 million tons in 1999 to 1,042 million tons traded in 2011. 94% of this volume is seaborne trade, the remaining 6% is cross-border overland trade. In addition, of all seaborne trade over three fourths is steam coal. Due to transportation costs, the seaborne coal market is traditionally divided into two sub-markets: the Atlantic market, with the most significant import countries being Germany, Spain and the UK, and the Pacific market, with the biggest importing countries being Australia, China, Indonesia and Japan. Seaborne Trade of Steam Coal in 2011

Euracoal; VdKI 2010; Dr. Lars Schernikau Economics of the International Coal Trade. The Renaissance of Steam Coal, Springer, 2010.

There are various reasons for this rapid development in the global coal trade: 1. high growth dynamics of developing countries, especially China and India

2. 3. 4.

decreasing coal production in Europe quality of coal consumers requirements for particular parameters. Nevertheless, its affordable price in comparison to other energy sources is foremost a strong incentive for using coal. The coal trade market is rapidly developing into a commodity market. An increasing number of transactions are based on coal indices (especially API2 and API4) and coal derivate volumes have reached in 2008 a tenfold of the physical coal trade volume in Europe. PRICE DEVELOPMENT IN THE COAL MARKET The historical view of the coal market shows that coal prices have remained more stable and affordable than the prices of oil or gas. After the recent price hikes in summer 2008, coal prices have already recovered and the market has returned closer to its equilibrium. Coal price projections indicate that coal will remain the most affordable resource in the following decades but volatility will likely increase. Affordable prices for electricity generation are of extreme importance for the efficient functioning of industry and the competitiveness of any economy. Availability of coal and an efficiently functioning coal trade market support a balanced and sustainable energy mix, which underlines the significance of coal for any economy. Coal Price Developments, API 2 and API4 in USD

Source: McCloskey Coal Price Index; Dr. Lars Schernikau Economics of the International Coal Trade. The Renaissance of Steam Coal, Springer, 2010.

COAL TRANSPORTATION

Coal can easily be transported and the mode of transport mostly depends on the distance to be covered. Over 90% of all transported coal is handled with large bulk carriers:

Handysize 40 to 45 kt Panamax 60 to 80 kt Capesize over 80 kt.

The availability of various modes of transportation makes coal transportation simple and safe. However, the transportation costs from the coal mine to the consuming power plant can often account for 80% to 90% of the final price of coal.