By Rohan Somwanshi

Chinese coal imports are expected to remain robust in 2015, despite facing pressure from several environment-friendly policies introduced this year, and such demand from China, as well as India, could boost coal prices in the global seaborne market in the second half of 2015, according to coal analysts.

Eva Tzima, research analyst at Intermodal Shipbrokers Co., told SNL Energy that even though China's coal consumption seems to have reached a ceiling after government initiated several regulatory efforts in 2014, imported coal is expected to be priced more favorable compared to China's domestic coal, and as a result, exports to the country will most probably sustain their levels in 2015.

Despite an oversupplied situation in seaborne markets, major coal exporting countries are continuing to ship coal abroad. As of October, coal exports from Russia were already 18.8% beyond an estimated target for 2014. Other coal exporters like the U.S., Colombia and Canada are also expected to surpass their annual targets, estimated by Australia's Bureau of Resources and Energy Economics, or BREE.

An analysis of data shows that countries likely to miss their annual export targets include large suppliers Indonesia and Australia. Still, in the first 10 months of 2014, exports from seven major exporting countries reached 965.6 million tonnes, which is 82.2% of the total export volumes estimated for these countries in 2014.

Paolo Coghe, senior analyst covering European Power, Coal and Carbon at Societe Generale, said by email that a meaningful recovery of global coal prices looks unlikely for at least a few quarters.

"The [pricing] situation should improve in [the second half of] 2015, with the hope that demand from Asia (primarily India and China) can bring on more of the much-missed growth on the demand side of the global seaborne coal market equation. If by then supply will have done its part, prices will resume their upward path," Coghe said.

The plummeting of oil prices in recent months may drag down other energy commodity prices down in the short term, but such impact would be minimal on coal prices, he said.

High expectations for China, India , but can they deliver?

China's coal imports totaled 20.1 million tonnes in October, down from 21.6 million tonnes in September, but up from 18.9 million tonnes in August. This year, China introduced a new policy on coal imports and also started levying taxes on the inbound shipments under a new tariff structure. But industry analysts believe China will still remain the driving force of seaborne coal trade.

Tzima said coal-intensive industries in China, such as crude steel, cement, and pig iron, are still using coal as an energy source, indicating that any short or longer-term growth squeeze in the sectors will not impact their continuous reliance on coal. The profit margins of the industries will stay under pressure due to an economic slowdown seen in China, which is exactly what will "support the usage of coal, which is one of the cheapest options of energy out there," Tzima said.

So far, India has imported 43% more coal than it did a year ago, Tzima said. "So we could well witness Indian imports filling the gap possibly created by Chinese imports going forward, with the only possible drawback the supportive measures that the Indian government could take in order to protect domestic production, although nothing is set in stone so far."

India imported 15.3 million tonnes of coal in October, according to Reuters. In the same month, India's domestic coal production totaled 52.7 million tonnes, data from the Press Information Bureau of India showed. India's total coal imports through October this year reached 146 million tonnes, according to an analysis of data by SNL Energy. Analysts have suggested that India remains a structural bull story for the seaborne thermal coal market.

Falling short of target: Indonesia, Australia

BREE predicted that Indonesia, the world's largest coal exporter, may ship out 420 million tonnes of coal in 2014. According to data obtained by SNL Energy from various sources, Indonesia has exported 331.1 million tonnes of coal through the end of October. In the July-September period, Indonesian coal exports averaged at 31.6 million tonnes per month, indicating Indonesia might fall short of the 400 million-tonne export mark.

Tzima said that Indonesian coal producers faced some issues with obtaining new licensing during 2014, which limited exports and created uncertainty in global seaborne markets that look to the world's leading coal exporter.

However, according to Tzima, most local Indonesian miners have managed to acquire licenses, indicating that adequate coal production should be in place in 2015 to satisfy demand from abroad.

Coal shipments from Australia, the world's second-largest exporter, have continued to grow during the year, but may still not reach the 2014 coal export target of 364 million tonnes. Total coal exports in 2014 from major Australian ports reached 260.7 million tonnes by October. The port data covers Port Waratah Coal Services Ltd., the port of Dalrymple and Gladstone, among other key terminals. Gladstone data showed it shipped 1.5 million tonnes of coal to Japan in October, while China and India took in 1.2 million tonnes of coal, each, in the month.

Japan's coal imports have remained steady in 2014, according to data from Japan Customs. As of October, Japan had imported 157.9 million tonnes of coal. Tzima said Japan will import as much if not more coal in 2015.

South Korea's coal imports in the first 10 months of 2014 stood at 100.2 million tonnes, after buyers shipped in 9.6 million tonnes in October, according to data from the Korea International Trade Association. South Korea buys most of its coal from Australia.

Colombia's coal exports in October declined from the previous month, reaching 8.2 million tonnes from 10.5 million tonnes, according to a government statistics agency. Total exports reached 75.6 million tonnes by October, compared to the 84 million-tonne export target estimated for 2014 by BREE.

South Africa's coal exports, which were estimated to be heading past 73 million tonnes in 2014, have reached 56.3 million tonnes at the end of October. The country exported 6 million tonnes in October, showing a gradual decline from August and September, a source told SNL Energy.

Canada is expected to possibly end the year above its estimated export target of 34 million tonnes, data from Statistics Canada showed. The country exported 3.2 million tonnes of coal in October, taking its 10-month aggregate to 30.9 million tonnes, according to the data.

Weakening demand from Europe seen hitting US exports

Even though the data collected from various sources by SNL Energy points to Asia as the driving force of seaborne coal demand, the European market continued to account for the largest share of U.S. coal export shipments. In the first 10 months of 2014, U.S. exported 49.4 million tonnes of coal to Europe, down 7.3% from 53.3 million tonnes in the same period of 2013, according to SNL Energy data. Comparatively, U.S. coal exports to Asia declined 22%, to 26.9 million tonnes in the 10 months through October, from 34.5 million tonnes in the year-ago period.

But U.S. exports have fallen from record highs in 2012, and competition from abroad is further weakening this year's shipments. An earlier analysis by Arch Coal Inc.'s Kent Smith indicated that increasing shipments from Colombia to Europe were presenting a stiff challenge to U.S. exporters, and the situation is expected to get difficult further following an estimated reduction in demand from Europe.

U.S. coal exports are expected to remain below 100 million tons in 2014, according to the U.S. Energy Information Administration, and are expected to slip further in 2015 as the agency forecasts no change improvement in global market conditions. The U.S. set an all-time coal export record of 124 million tons of coal in 2012.