Recent Australia-China trade talks could impact on global coal supply/demand
According to Commodities at Sea, S&P Global Market Intelligence, annual seaborne shipments of Australian coal to mainland China have declined to 70.3 million metric tons (mt) in 2020 and to zero in 2021 and year-to-date 2022, after hitting a record high of 92 million mt in 2019.
Seaborne shipments of Australian coal to northwestern Europe have increased to 9.2 million mt in the first half of 2022 from 5.4 million mt during the same period last year.
According to Mr. Pranay Shukla, associate director at S&P Global Market Intelligence, “if the recent development in trade talks between Australia and China leads to a restart in buying of Australian thermal and metallurgical coal by mainland China, it is expected to leave Europe and its allies with tighter coal supplies who are already depending on Australia as an alternative to Russian coal.
“Europe’s ban on Russian coal is scheduled for August onwards. Due to this, there has been an ongoing strong demand for Australian material in Japan and South Korea, coupled with an expectation of strong flows into Europe in the second half of 2022, which is expected to continue for a couple of years.
“If mainland China lifts the Australian coal import restrictions, Europe would need to source more from the U.S., Colombia, Mozambique and Canada. There were also some Indonesian materials seen towards European destinations recently and expected to increase further.
“Coal prices (excluding Russian coal) are expected to increase further. For the Indian subcontinent, the region has reduced the imports of Australian materials this year, which is believed to be due to the high prices of Australian coal.”
Source: S&P Global Market Intelligence