A recent article was published in the Australian Financial Times with the title “This global steel boss says Australia is not investing enough in coal.” This was a poor editing choice for a title as the content was primarily geared towards the long term outlook for coking coal demand in India. There were a couple questions which touched on the Australian investment climate as it pertains to coal supply, but the meat of the article pertains to the long term nature of coking coal demand. This is why I think every coal investor should read it.
The main takeaway is the following quote:
“Today, my message is essentially the same, which is to say that demand for coking coal in India is going to grow, it is going to double in the next 10 years. India is already a bigger importer of coking coal than China.”
The article is linked here and below.
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India has said they are doubling steel production to 300 million tonnes a year by 2030. This should keep demand for coking coal strong for the rest of this decade. Combined with the current constraints to incremental supply (ESG, labor, geology, etc.) prices for coking coal should continue to march higher during the decade, perhaps only interrupted by periods of economic contraction. This article discusses the particular point sources of coking coal demand in India, and it comes straight from the horses mouth, so to speak. The new blast furnaces Tata Steel is building will operate for at least 20 years – that is a lot of incremental long term demand.