Coal news and updates

Dry bulk shipping is witnessing Chinese imports of coal rising to two-year high, but shorter sailing distances are limiting the upside of the higher imports, according to Bimco.

The latest Bimco report said Australia and Indonesia, being the main exporters of coal to China, are growing their market share at the expense of longer haul exports like the US and South Africa. Therefore dry bulk shipping is not enjoying full tonne-mile demand when Chinese imported coal volumes increase.

“After dropping in 2015, the commodity trades into China are now showing great support to the dry bulk shipping industry,” said Peter Sand, chief shipping analyst at Bimco.

“The coal imports are achieving levels as before in 2015 and together with the highest level of imported iron ore, which is the most influential dry bulk trade, China is keeping the wheels rolling in terms of shipped volumes,” Sand said.

“Despite a solid surge in coal volumes, the demand side of the dry bulk shipping industry will not benefit to the same extent as before. Since 2014, there has been a change in the coal trade patterns where China has singled out its key distributors and focused increasingly on them. This has brought around shorter sailing distances, due to the proximity of exporters.”

For the third quarter this year, Chinese seaborne coal imports achieved the highest tonne-miles since the fourth quarter of 2014, with the main drivers being Australia and Indonesia. Unfortunately for the tonne-miles in the dry bulk shipping, Indonesia has absorbed 80% of the additional sheer seaborne volume in the third quarter.

“In 2013 China’s coal imports achieved high tonne-miles for the dry bulk shipping industry, due to China sourcing 23% of its seaborne coal volumes from origins other than Australia and Indonesia; primarily long haul routes from the eastern part of the US and South Africa,” Sand commented.

These trade patterns have since changed to only sourcing 16% from other origins instead of Australia and Indonesia in 2016, Sand noted. The origins have also changed to primarily shorter hauls from the western part of Canada and Malaysia – and not importing any significant moaunt from the US and South Africa, since October 2014.

“For the main exporters, it would be preferable if Australia can keep their coal supply growing like the coal demand growth in China, as Australia coal travels 50% further than Indonesian coal,” he said.