Industry Trend Analysis - Coal Sector On Divergent Growth Paths - JULY 2017

BMI View: Polish thermal coal production will outperform coking coal in the coming years as the government outlines a series of investments aimed at expanding current power generation, although EU regulations will pose downside risks to our forecasts over 2017-2021. Total coal production will bounce back to grow by 1.6% in 2017 supported by higher prices, following a drop in absolute output over 2016.

The polish coal sector will experience varying fortunes in the coming years. On the one hand, thermal coal will enjoy significant growth opportunities as current power generation capacity fails to meet an increase in demand. On the other, metallurgical coal production will stagnate due to waning demand as a result of a drop in domestic steel output. We anticipate EU climate regulations on carbon emissions to pose downside risks to our current forecasts, particularly in regards to thermal coal.

Poland is the second largest coal producer in the EU with an output of USD136.7 million tonnes (mnt) as of 2016, 90% of which is comprised of thermal coal, which it relies on for electricity generation. We forecast total coal production to reach 142.8 (mnt) by 2021.

Poland And Germany To Dominate
Select European Countries - Coal Production (mnt)
e/f = BMi estimate/forecast. Source: BMI Calculation/Energy Information Administration

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