Coal news and updates

Seaborne Coal Volumes Hit Record Highs In 2023

Global coal demand continues to rise, especially in Asia, with seaborne coal volumes predicted to surpass previous records.

• US coal production has decreased, but exports, particularly to Asia, are increasing, with CEOs focusing on international markets.
• Drought conditions in Panama cause shipping delays and rerouting, favorably impacting Panamax freight rates and altering global coal trade routes.

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Clean, green renewables are on the rise. Coal, the dirtiest fuel, is dying. Or so the energy transition line goes. The reality, according to the International Energy Agency (IEA), is that global coal production, consumption, and seaborne volumes are all at all-time highs in 2023.

Coal isn’t dying yet globally, just in the West. It’s still alive and kicking in Asia — and still growing globally as a result. That’s bad news for greenhouse gas emissions, but good news for owners of the dry bulk ships that transport coal, particularly as America exports more of its own mining output via long-haul voyages to Asia.

“Demand to ship coal has been a good support for the dry bulk market over the first half of the year,” said ship brokerage BRS on Thursday. “Despite coal demand in Europe and North America resuming its downward trend, Asia has provided an offset as demand continues to grow there.”

Seaborne coal volumes are predicted to reach 1,335,000 million metric tons this year, topping 2019’s record of 1,331,000 tons, the IEA said in its recently released midyear outlook.

BRS estimated that coal shipping demand measured in ton-miles (volume multiplied by distance) rose 9% in January-July versus the same period last year.

Record consumption and production

The IEA estimates that global coal demand will reach 8.39 million tons this year, up slightly from last year’s all-time high. Three out of every 4 tons of coal will be consumed in China, India, and Southeast Asia. China alone is expected to account for 56% of global consumption.

“As Europe cuts down on its coal-fired power generation to be in line with its green energy transition, China and India have continued to add further capacity at levels that far exceed the current pace of power plant retirements,” said ship brokerage SSY on Monday.

SSY noted that 86% of Chinese coal plants are less than 20 years old, and 52% are 10-20 years old. “Considering that the average lifetime of a coal power plant is 40 years, a full capacity phaseout like the one targeted by Europe is unlikely to be replicated,” said SSY.

On the supply front, the IEA expects global coal production to reach a new high this year, topping last year’s record of 8.63 million tons, with China, India and Indonesia accounting for over 70% of the total.

According to BRS, rising domestic production in India reduced that country’s coal imports by 7% year-on-year in January to July, to 134 million tons. BRS said the drop mostly affected demand for Indonesian coal aboard Capesize bulkers (vessels with capacity of around 180,000 deadweight tons or DWT).

In contrast, this year’s high Chinese domestic production is being complemented by higher imports, a plus for dry bulk shipping.

China imported 211.8 million tons of coal in the first seven months of 2023, a 77% surge from the same period last year, said BRS. Indonesia has been China’s biggest seaborne supplier, followed by Russia and Australia.

US exports higher share of production