Universität zu Köln

Trueby, Johannes (2013). Modelling and Analysis of Global Coal Markets. PhD thesis, Universität zu Köln.

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Abstract

The thesis comprises four interrelated essays featuring modelling and analysis of coal markets. Each of the four essays has a dedicated chapter in this thesis. Chapters 2 to 4 have, from a topical perspective, a backward-looking focus and deal with explaining recent market outcomes in the international coal trade. The findings of those essays may serve as guidance for assessing current coal market outcomes as well as expected market outcomes in the near to medium-term future. Chapter 5 has a forward-looking focus and builds a bridge between explaining recent market outcomes and projecting long-term market equilibria. Chapter 2, Strategic Behaviour in International Metallurgical Coal Markets, deals with market conduct of large exporters in the market of coals used in steel-making in the period 2008 to 2010. In this essay I analyse whether prices and trade-flows in the international market for metallurgical coals were subject to non-competitive conduct in the period 2008 to 2010. To do so, I develop mathematical programming models - a Stackelberg model, two varieties of a Cournot model, and a perfect competition model - for computing spatial equilibria in international resource markets. Results are analysed with various statistical measures to assess the prediction accuracy of the models. The results show that real market equilibria cannot be reproduced with a competitive model. However, real market outcomes can be accurately simulated with the non-competitive models, suggesting that market equilibria in the international metallurgical coal trade were subject to the strategic behaviour of coal exporters. Chapter 3 and chapter 4 deal with market power issues in the steam coal trade in the period 2006 to 2008. Steam coals are typically used to produce steam either for electricity generation or for heating purposes. In Chapter 3 we analyse market behaviour of key exporting countries in the steam coal trade. This chapter features the essay Market Structure Scenarios in International Steam Coal Trade. In this paper, we analyse steam coal market equilibria in the years 2006 and 2008 by testing for two possible market structure scenarios: perfect competition and an oligopoly setup with major exporters competing in quantities. The assumed oligopoly scenario cannot explain market equilibria for any year. While we find that the competitive model simulates market equilibria well in 2006, the competitive model is not able to reproduce real market outcomes in 2008. The analysis shows that not all available supply capacity was utilised in 2008. We conclude that either unknown capacity bottlenecks or more sophisticated non-competitive strategies were the cause for the high prices in 2008. Chapter 4 builds upon the findings of the analysis in chapter 3 and adds a more detailed representation of domestic markets. The corresponding essay is titled Nations as Strategic Players in Global Commodity Markets: Evidence from World Coal Trade. In this chapter we explore the hypothesis that export policies and trade patterns of national players in the steam coal market are consistent with non-competitive market behaviour. We test this hypothesis by developing a static equilibrium model which is able to model coal producing nations as strategic players. We explicitly account for integrated seaborne trade and domestic markets. The global steam coal market is simulated under several imperfect market structure setups. We find that trade and prices of a China - Indonesia duopoly fits the real market outcome best and that real Chinese export quotas in 2008 were consistent with simulated exports under a Cournot-Nash strategy. Chapter 5 looks at the long-term effect of Chinese energy system planning decisions. The time horizon is 2006 to 2030. The analysis in this chapter combines a dynamic equilibrium model with the scenario analysis technique. The corresponding essay is titled Coal Lumps vs. Electrons: How Do Chinese Bulk Energy Transport Decisions Affect the Global Steam Coal Market? The essay demonstrates the ways in which different Chinese bulk energy transport strategies affect the future steam coal market in China and in the rest of the world. Increasing Chinese energy demand will require additional energy to be transported from the supply to the demand regions. If domestic transport costs escalate, Chinese coal consumers could increasingly import coal. We analyse two settings: one in which coal is increasingly transported by rail and one in which coal energy is transported as electricity. A key finding is that if coal were converted into electricity early in the supply chain, worldwide marginal costs off coal supply would be lower than if coal were hauled by train. Furthermore, China's dependence on imports is significantly reduced in this context. Allocation of welfare changes particularly in favour of Chinese consumers while rents of international producers decrease.

Item Type:	Thesis (PhD thesis)
Creators:	Creators Email ORCID ORCID Put Code Trueby, Johannes johannes.trueby@yahoo.de UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-50319
Date:	29 January 2013
Language:	English
Faculty:	Faculty of Management, Economy and Social Sciences
Divisions:	Externe Einrichtungen > An-Institute > Associated Institutes of the Faculty of Management, Economics and Social Sciences > Institute for Energy Economics
Subjects:	Economics
Uncontrolled Keywords:	Keywords Language Coal, Modelling, Market power, Cournot, Resources, Stackelberg, Coking coal, Mining English
Date of oral exam:	17 January 2013
Referee:	Name Academic Title Höffler, Felix Prof. Dr.
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/5031