Australia: Thermal coal exports surge by 24% in October amid rise in S.Korean imports

Australian thermal coal exports for Oct'20 stood at 18.5 mn t against 14.9 mn t in Sep'20, recording an increase of 24% m-o-m basis, CoalMint vessel-line up data reveals.

After China issued verbal notice to its utilities last month to stop Australian coal imports, the sellers there have to divert their coal to various other countries.

The vessel-lineup data further revealed that the country was back to exporting coal to its traditional markets like Japan and South Korea.

A sudden spike of 94% m-o-m basis can be seen in Australian coal exports to South Korea in Oct'20 at 4.02 mn t. Whereas, in case of Japan, the same stood at 6.09 mn t, up by 28% m-o-m.

South Korean coal demand reduced this year in the first quarter due to winter restrictions on coal-fired plants and then later due to COVID-led lockdown, resulting in poor energy demand, increased nuclear availability and cheaper gas prices. However, in October, high CV Australian coal had been offered at a wider discount against other-origin material making it an attractive option for South Korean coal-fired plants.

Interestingly, as the coal prices slumped this year, Vietnam was seen importing South African and Australian thermal coal amid increasing demand for electricity production at the lowest cost. In Oct'20, Australian coal exports to Vietnam surged by 64% m-o-m at 1.28 mn t. Whereas, Australian coal exports to India stood at 1.41 mn t which was around 0.32 mn t four months back in Jul'20.

Port-wise non-coking coal exports

Qty in mn t

Outlook ahead

In a recent draft proposal by South Korea's environment ministry, the country plans to suspend as many coal-fired units as possible and impose an 80% cap on output from any operational units in December-March. This would mean lesser thermal coal imports from Australia.

However, with the winter season approaching and spot price of gas likely to rise to a monthly average of $3.42/MMBtu in January 2021, Australian thermal coal demand is likely to remain firm from countries like Japan, Vietnam and from the Indian cement sector.