One of the quirks of the Asian marine coal market is that volumes have held up remarkably well, despite the fuel demonized for its role in climate change and the growing number of countries and companies rejecting it.
At least that was the case in recent years, but there are now signs that volumes are trending down in the most consuming region.
The amount of coal offloaded at Asian ports has now declined for 12 consecutive months, comparing each month to the same month a year earlier, according to ship and port tracking data from Refinitiv.
The volume of all types of coal unloaded in March was 73.98 million tonnes, down 10% from 82.26 million in March 2020, the data showed.
This extended a pattern of monthly declines dating back to April 2020, the last time volumes increased from the same month a year earlier.
The data also shows that this month is likely to continue the trend, with just 58.57 million tonnes unloaded through April 28, meaning that even when the last days of the month are fully assessed, it is unlikely that April of this year exceeds the 80.18 of April 2020 million.
There is an argument to be made that the volumes transported by sea in 2020 have been affected by the coronavirus pandemic, which has caused a drop in economic growth and demand for electricity in the region.
However, given that the pandemic only spread to much of Asia after the first quarter of last year and was largely contained in the first quarter of this year, at least in China, the comparison of the two periods can exclude the peak from its impact.
Total sea-transported coal released in Asia fell 6.5 percent year-on-year to 228.8 million tonnes in the first three months of 2021.
Among the region’s top importers, China grew from 71.39 million tonnes in the first quarter of 2020 to 59.86 million during the same period in 2021, while India’s second-largest buyer grew from 53.77 million to 47.74 million.
The third largest buyer, Japan, remained broadly stable at 43.97 million tonnes in the first quarter, down slightly from 44.07 million in 2020, while the fourth South Korean importer was similar, with imports of January-March of 26.83 million tonnes being just a little below 27.16 million. from the same period in 2020.
Do policies stimulate the market?
The problem for coal-exporting countries such as Indonesia and Australia is that the market is increasingly policy driven, rather than a market that relies on the fundamentals of supply and demand.
China plans to reduce its coal consumption to less than 56% of its energy consumption in 2021, down from 56.8% in 2020 and 68% at the start of the previous decade, according to a government document.
As the increase in the overall size of the energy market means that China’s coal consumption is likely to increase, even as its market share shrinks, President Xi Jinping has hired the world’s largest miner, importer and consumer of fuel. in the world to start gradually reducing its consumption from 2026. From.
“We will strictly limit the increase in coal consumption during the 14th period of the five-year plan (2021-2025) and gradually reduce it during the 15th period of the five-year plan (2026-2030),” Mr. Xi at the leaders’ climate summit. by US President Joe Biden on April 22.
While the pledge disappointed environmental activists who had hoped for stronger action, it suggests that China’s maritime imports will struggle to grow and should struggle to maintain existing volumes for years to come.
India, the world’s second largest importer of coal, has a policy of reducing imports in favor of increased domestic production and a shift to increasing renewables in its energy mix.
It is probably only the inability of state-controlled Coal India to increase production, which fell for the second year in 2020, that keeps imports in India’s energy mix.
Japan has just canceled its latest proposal for a new coal-fired power plant, leaving no new units planned other than those already under construction, which will largely replace older, less efficient units being phased out.
The South Korean government is also considering moving away from coal-fired production and has pulled out of funding for coal projects abroad, joining many Japanese groups who have pledged to end their involvement in fuel. polluting.
As coal transported by sea to Asia will continue for many years to come, it looks like the story of the growth is over, and the question now is how fast the pullback will become.
(Edited by Sam Holmes)