German Hard Coal Imports Could Fall by 16-30% in 2020

Germany's imports of hard coal will likely decline by between 16 and 30 per cent in 2020, importers group VDKi forecast on Thursday, citing lower industry and energy demand due to the coronavirus crisis and competition from renewables.

The decline would mark the fifth consecutive year imports have dropped and would be steeper than the 10.2 per cent year-on-year decrease seen in 2019, the group told a press conference.

VDKi put expected total imports in 2020 at between 29.6 million and 35.4 million tonnes, compared with 42.2 million last year.

Between January and April, coal imports were down 31.4 per cent compared with the year-earlier period.

Germany's position as Europe's biggest economy and coal importer means it plays a significant role in global trade flows and price discovery at landing ports.

It uses coal in power and heat generation, and in steelmaking.

VDKi in January noted a trend for inexpensive gas to push coal out of power generation, exacerbated by rising carbon emissions permits prices, which it said continued.

The pandemic came on top, eroding power demand at big manufacturing plants which rely on nearby conventional power stations, said VDKi's managing director Franz-Josef Wodopia.

Hard coal-to-power generation in Jan-May had fallen by 41.4 per cent year-on-year, he noted.

As for crude steel, German production in Jan-April had dropped by 10 per cent and that of pig iron by 11.2 per cent.

In the policy arena, Germany's coal mining, burning and importing sectors find themselves with their backs to the wall after the country passed a bill for exiting coal by 2038 to curb climate harming emissions.

Generation plants and brown coal mines must close according to a staggered schedules.

But VDKi said that coal-fired power would retain a role in supplying 24-hour electricity for some time in some locations to back up weather-driven renewables, because the expansion of transmission grids is lagging behind.