Japan: Thermal coal imports rise 25% m-o-m in Jul'21 with Australia leading the race

Japan's thermal coal imports rose 25% m-o-m to 10.54 million tonnes (mn t) in Jul'21 as against 8.5 mn t in Jun'21, CoalMint's vessel line-up data revealed. Imports from Australia were recorded the highest at 7.48 mn t, up 40% m-o-m.

During Jan-Jul'21, the country's thermal coal imports reached 67.87 mn t, down 5% y-o-y.

Coal imports from Russia rose slightly to 1.42 mn t, while imports from Indonesia and U.S recorded a m-o-m decline to 1.21 mn t, and 0.29 mn t, respectively.

Australian coal imports rise on shift in trade flows

Japan's thermal coal imports from Australia remained elevated this year as these reached 46.71 mn t during Jan-Jul'21, up 5% y-o-y.

Amid the trade spat between China and Australia since late last year, Japan was one of the key countries buying increased amount of Australian thermal coal.

Despite the recent rise in Australian coal prices, Japan's coal imports from the country remained strong as logistic concerns in Indonesia or South Africa disrupted trade flows.

Given the higher-energy value and lower impurities of Australian thermal coal, Japan's power and steel companies preferred it over coal from other origins due to the stringent environment restrictions.

Australian 5,500 NAR were priced at $110/t, FoB basis in Aug'21, up 100% since Jan'21, and South African RB2 (5,500 NAR) grade coal prices have also reached $110/t, up 52% since Jan'21. Indonesian 5,500 GAR prices remain higher at $115/t in Aug'21, up 50% since Jan'21.

Rising coal prices pull down imports from Indonesia

Owing to a sharp rise in Indonesian coal prices over the last few months, coal imports from the country have been on a declining trend this year.

Indonesia's benchmark coal price, also known as Harga Batubara Acuan (HBA), rose to a decadal high to $131/t for Aug'21, up 73% since Jan'21.

A domestic supply crunch in Indonesia pulled up its thermal coal prices last month, leading the government to impose sanctions on coal exports of over 30 companies to meet the domestic supply shortfall. Lower cargo availability from the country owing to floods in the last few months also led to a drop in coal imports from Indonesia.

Resilient freight rates, on the other hand, pulled down Japan's coal imports from U.S.

Outlook

Rising power demand in Japan is likely to keep its coal imports higher in the upcoming months. However, the stringent environment regulations in the country may cap any sharp rise in coal imports in the longer run.