SXCoal: Coal shipments to advanced economies are expected to reach their lowest level in 15 years in 2024, dropping by 6% year-on-year in the first 10 months, according to Filipe Gouveia, shipping analyst at Bulk Materials International.
Declining coal shipments driven by Europe's reduced demand
This decline is largely due to weakening demand, especially in Europe, where coal imports fell by 22% as countries move away from coal in power generation.
Decrease in thermal coal, slight rise in coking coal
Thermal coal, used for power generation, saw a 9% year-on-year drop, with Europe leading the decline. In contrast, advanced Asian economies saw only a 4% drop in coal imports due to higher temperatures driving demand for air conditioning. Shipments of coking coal, used mainly in steel production, increased by 1% despite a slight dip in steel output, showing its essential role in producing new steel rather than recycled steel.
Declining share of coal shipments to advanced economies
For the second consecutive year, coal shipments to advanced economies have declined. Their share of global coal deliveries has dropped significantly, from 57% in 2009 to just 30% now. This has contributed to a 0.5% reduction in global dry bulk cargo volumes, with the Capesize vessel market being particularly impacted, according to Gouveia. Overall, however, global coal shipments continue to grow, driven by strong demand from emerging economies.
Impact on Panamax and Capesize freight segments
The Panamax and Capesize vessel segments, which transport 53% and 33% of coal shipments, respectively, have also felt the effects. Panamax coal freight volumes dropped by 2% year-on-year from January to October, while Capesize volumes fell by 11%. The sharper decrease in Capesize shipments likely reflects reduced cargo volumes to Europe and rising freight rates, making Panamax vessels more attractive for some shipments.
Supply-side challenges for major exporters
Coal exports from the U.S., Russia, and South Africa declined by 10%, 18%, and 34%, respectively, year-on-year. Russia and South Africa faced logistical challenges that limited exports, while the U.S. redirected more coal to emerging economies as European demand weakened. Other major exporters showed stable shipments.
Future outlook on coal demand
Looking ahead, thermal and coking coal imports in advanced economies are expected to continue declining as decarbonization efforts intensify. With growing investments in renewable electricity and recycled steel production, demand for coal is expected to fall. Emerging economies may soon follow this trend, Gouveia added, as renewable energy production and domestic mining efforts rise. Global coal shipments are forecasted to decrease by 1-2% in 2025 due to these expanding decarbonization efforts.
Note: This article has been written in accordance with a content exchange agreement between SXCoal and BigMint.
