AsiaDry Cargo

Asian coal demand fills the gap left by Japan and Europe

Coal’s demise as a significant backbone to the global dry bulk trades is not coming any time soon, new research from Arrow Shipbroking clearly shows. 

News carried by Splash on Friday that Japan, the world’s third largest coal importer, will shutter 100 of its 140 coal-fired power plants over the coming decade created a stir among readers. However, planned Asian coal-fired power stations are set to dwarf Japan’s coal usage, new research shows. 

Arrow Shipbroking’s head of research Burak Cetinok told Splash today he anticipated global coal seaborne trade to continue to grow in the next decade, especially during the early years. However, the pace of growth will be much slower. More importantly, Cetinok said he expected significant changes in trading patterns with flows diverted from the major consumers of the past such as Japan, South Korea and Europe to the developing economies in Southeast Asia and Asia-Pacific, something mentioned on Friday by Nick Ristic, a dry bulk researcher at Braemar ACM.

India, Vietnam, Bangladesh and the Philippines combined are set to add almost three Japans in terms of coal demand in this decade

Ristic noted that the rise of coal imports in South and Southeast Asia was changing the makeup of the ships that carry coal. The cape trades in the North Atlantic and Europe are on the decline while the smaller geared trades focusing on the Middle East, South and Southeast Asia are making gains, part of a longer term trend Braemar ACM has detected in recent years. Since 2015 handies and supras have gone from carrying 19% to 25% of the world’s coal trade, at the expense of capes. 

On planned new coal power plants around the world, Arrow’s Cetinok said: “Three times as much project capacity was cancelled since 2010 than it is currently being built, but the orderbook is still large. Total coal fired power generation capacity that is planned, approved or under construction is about 25% of the current operating capacity on a global basis.” 

Vietnam, Bangladesh and Philippines alone are building coal plants with total capacity 40% larger than Japan’s current installed capacity.

While there has been a lot of project cancellations in India the Asian giant still has 66 GW of new plants to be commissioned over the next six years. That compares to Japan’s current operating capacity of 46.7 GW.

“In other words,” Cetinok said, “India, Vietnam, Bangladesh and the Philippines combined are set to add almost three Japans in terms of coal demand in this decade. That should offset, at least to a certain degree, the drop in demand elsewhere.”

The Arrow researcher added that these projections did not include China, which, while culling many coal projects of late, is still building 100GW of coal power plants with another 106GW in the pipeline.

China remains key, agreed Rebecca Galanopoulos Jones, a researcher with Alibra Shipping. 

“Over the next five years, global demand forecasts predict that there will be little growth in global coal consumption but demand will remain stable. Thereafter much depends on China, the world’s largest consumer of coal, and its economic growth objectives and policies towards CO2 emissions,” Galanopoulos Jones told Splash

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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