Coal trade reshaped by Asian demand

Despite brimming stockpiles, the nation’s coal imports surged by 12% in the first half of 2024. While a slowdown is anticipated for the remainder of the year, China’s insatiable appetite has far-reaching implications for global coal supply chains and prices.
India, not to be outdone, has witnessed a “remarkable” rise in coal imports. A 21% increase in seaborne coal imports during the first four months of 2024 underscores the nation’s determination to secure energy supplies amid rapid economic growth. The extension of a coal blending mandate until at least October 2024 further solidifies India’s position as a major importer.
“Even though India seeks to reduce the quantity of imports, new routes are being established such as the railway from Russia to India via Iran, and a trial of met coal deliveries from Mongolia,” said the report.
However, Vietnam’s emergence as a coal-hungry nation is a surprising development, said the IEA. The country’s coal imports have skyrocketed 43% in the first four months of 2024, primarily driven by a confluence of factors including low hydropower availability and robust power demand growth.
“However, this increase is expected to flatten for the rest of the year.”
Looking ahead to 2030, Vietnam aims to build five new coal-fired power plants that could further increase the demand for coal. However, the report noted that the announced cancellation of the Song Hau 2 project “casts doubt over the others”.
Indonesia growth
To satiate the voracious appetite of the Asian giants, Indonesia is poised to become the world’s dominant thermal coal exporter, capturing nearly half of global exports in 2024. This surge in Indonesian exports underscores the country’s pivotal role in meeting the region’s energy needs. In contrast, Russia’s coal exports are grappling with the consequences of sanctions and logistical challenges, resulting in a significant contraction.
Australia, while maintaining its position as a major coal exporter, is anticipated to see “modest” export growth as demand from key markets stabilises. Mongolia, however, is emerging as a rising star in the met coal market, on track to outshine traditional powerhouses like Colombia and South Africa.
Elsewhere, Europe’s role in the global coal trade is undergoing a dramatic decline. “Contrary to growing imports in Asia, monthly coal imports into the European Union and United Kingdom have declined to their lowest level of the 21st century,” said the report. Turkey’s ascent to the position of the largest coal importer outside of Asia emphasises “Europe’s decreasing involvement in global coal trade”.
Global coal demand, meanwhile, is expected to remain relatively flat in 2025. Despite hitting a record high in 2023, the world’s reliance on coal is showing signs of plateauing as renewable energy sources continue to expand.
“Our analysis shows that global coal demand is likely to remain broadly flat through 2025, based on today’s policy settings and market trends,” said Keisuke Sadamori, IEA director of energy markets and security. “The continued rapid deployment of solar and wind, combined with the recovery of hydropower in China, is putting significant pressure on coal use. But the electricity sector is the main driver of global coal demand, and electricity consumption is growing very strongly in several major economies. Without such rapid growth in electricity demand, we would be seeing a decline in global coal use this year. And the structural trends at work mean that global coal demand is set to reach a turning point and start declining soon.”
Renewable switch
The growing adoption of renewable energy sources is particularly evident in China. While the country has seen a surge in electricity consumption, a recovery in hydropower production combined with significant investments in wind and solar power is tempering coal demand growth.
“A recovery in hydropower in China combined with significant expansion of wind and solar is expected to slow the growth of coal power generation globally in 2024,” the IEA noted.
However, the picture is not uniform across all regions. India and Vietnam, for instance, have experienced increased coal demand due to strong electricity consumption and low hydropower output. India’s rapidly expanding economy is also boosting industrial coal consumption.
Yet, even in these countries, growth is expected to moderate.
In contrast, advanced economies are on a downward trajectory. The European Union, for example, is expected to see a 19% decline in coal demand in 2024, driven by the expansion of renewables and weak overall demand.
But while the overall global picture suggests a plateauing of coal demand, the IEA cautions that this forecast is subject to uncertainties. “Weather, economic activity, natural gas prices and other factors could still result in slight fluctuations,” it said. “This is particularly true for China’s electricity, sector which accounts for one-third of global coal demand.”
Source: Baltic Exchange