The existence of a single market arose from the growth in seaborne coal trade brought on by the combination of firstly, growth in the demand for coking coal in the 1960s and secondly, sharply rising oil prices during the 1970s. Before 1960, international coal trade had been primarily land based, and been between neighbouring countries. Over one-half of the world’s total trade in 1960 was within Europe and the former Soviet Union. Germany was the major exporter to OECD Europe and Poland, whereas the former Soviet Union was the major supplier to Eastern Europe. There was also considerable coal flow from the US to Canada.
The only significant coal trade was from the US to OECD Europe and from the US to Japan. During the 1960s there was an increasing demand for coking coal in OECD countries with insufficient low cost supplies of their own, resulting in considerable growth in seaborne trade. During the 1970s, newly industrialising countries such in South Korea, Taiwan and Brazil became major importers of coking coal.
The rise of oil prices in 1973 initiated a new phase in international coal trade. The rise provided a strong incentive to convert power stations and other installations from oil; and sometimes from gas to coal. Especially incentivised were those which were initially designed for coal and which had been converted, in the period 1960-1973, to take cheaper heavy fuel oil. The rise also resulted in decisions to construct new coal-fired power plants to use relatively inexpensive imported coal. The trend was reinforced by the oil price increase in 1979, partly because of new coal- fired plants coming on stream, and partly because of the oil product component of the cost of producing and transporting coal. Coal prices peaked in 1982 and then fell over the remainder of the decade. After recovering some ground in 1990, coal prices fell again until 1995.
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