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Modeling and Analysis of the International Steam Coal Trade

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  • Clemens Haftendorn
  • Franziska Holz

Abstract

Coal continues to play an important role in the global energy sector and with the increase in international trade a global market for steam coal has de­veloped. We investigate market structure and recent price developments with a numerical modeling approach and develop two partial equilibrium models, a quantity based model and a model additionally incorporating energy values. We compare two possible market structure scenarios for the years 2005 and 2006: perfect competition and Cournot competition. Our chief finding is that, for both models, the simulation of perfect competition better fits the observed real market flows and prices. However, we also note that spatial price discrimination and a time lag in the pricing-in of capacity constraints are additional mechanisms in the market. From a modeling perspective, relying only on coal quantities leads to distortions in estimated trade flows, suggesting that an energy-based model is superior.

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Bibliographic Info

Article provided by International Association for Energy Economics in its journal The Energy Journal.

Volume (Year): Volume 31 (2010)
Issue (Month): Number 4 ()
Pages: 205-230

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Handle: RePEc:aen:journl:2010v31-04-a10

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Cited by:
  1. Trüby, Johannes, 2012. "Strategic Behaviour in International Metallurgical Coal Markets," EWI Working Papers 2012-12, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  2. Clemens Haftendorn & Franziska Holz & Christian von Hirschhausen, 2010. "COALMOD-World: A Model to Assess International Coal Markets until 2030," Discussion Papers of DIW Berlin 1067, DIW Berlin, German Institute for Economic Research.
  3. Trueby, Johannes & Paulus, Moritz, 2011. "Market Structure Scenarios in International Steam Coal Trade," EWI Working Papers 2011-2, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  4. Huppmann, Daniel, 2013. "Endogenous shifts in OPEC market power - A Stackelberg oligopoly with fringe," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79758, Verein für Socialpolitik / German Economic Association.
  5. Growitsch, Christian & Hecking, Harald & Panke, Timo, 2013. "Supply disruptions and regional price effects in a spatial oligopoly - an application to the global gas market," EWI Working Papers 2013-8, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  6. Nagl, Stephan, 2013. "The Effect of Weather Uncertainty on the Financial Risk of Green Electricity Producers under Various Renewable Policies," EWI Working Papers 2013-15, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  7. Paulus, Moritz, 2012. "How are investment decisions in the steam coal market affected by demand uncertainty and buyer-side market power?," EWI Working Papers 2012-3, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  8. Paulus, Moritz & Trueby, Johannes & Growitsch, Christian, 2011. "Nations as Strategic Players in Global Commodity Markets: Evidence from World Coal Trade," EWI Working Papers 2011-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  9. Haftendorn, C. & Kemfert, C. & Holz, F., 2012. "What about coal? Interactions between climate policies and the global steam coal market until 2030," Energy Policy, Elsevier, vol. 48(C), pages 274-283.
  10. Daniel Huppmann & Ruud Egging, 2014. "Market Power, Fuel Substitution and Infrastructure: A Large-Scale Equilibrium Model of Global Energy Markets," Discussion Papers of DIW Berlin 1370, DIW Berlin, German Institute for Economic Research.
  11. Nagl, Stephan, 2013. "Prices vs. Quantities: Incentives for Renewable Power Generation - Numerical Analysis for the European Power Market," EWI Working Papers 2013-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln.

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