GLOBAL coal imports are on course for their third-highest monthly total on record this May as the Middle East conflict forces Asia and Europe to switch from oil and gas supplies disrupted by fighting in the Strait of Hormuz.
Coal shipments typically slow during April and May as the northern hemisphere heating season winds down, yet freight rates for medium-sized bulk carriers are running 50% above February levels, said the Financial Times citing pricing agency Argus.
Rates from Indonesia, the world’s largest coal exporter, have risen by 60 to 75% over the same period, while those from Australia are up 40 to 50%, said the UK newspaper.
Angeliki Frangou, CEO of Greek shipping group Navios Partners, said the shift was striking. For every ton of gas displaced about two tons of coal were required as a substitute — a dynamic that had sharply revived interest in a fuel many had written off, said the Financial Times.
The Middle East conflict has compounded an already tight thermal coal market, it said.
Indonesian export restrictions that came into force in April had squeezed supplies even before the switching from gas began in earnest.
China’s coal demand has also been lifted by a surge in coal-to-chemicals production, as Gulf disruptions created a global shortfall of petrochemical products.
Several Asian countries have reversed earlier commitments to reduce coal consumption. South Korea lifted its seasonal utilisation cap on coal-fired plants in March, while Thailand has restarted mothballed capacity, said the Financial Times.
Vietnam and Japan have also increased coal generation. Shipments to Japan, South Korea and the European Union were up 27% year-on-year in April, according to shipping association Bimco.
