The International Energy Agency (IEA) has warned that global coal production, consumption, and seaborne volumes are all at all-time highs in 2023.
18/08/2023
Coal is still a mainstay in the West and Asia; as a result, it is growing globally. As bad a news as it is as greenhouse gas emissions are concerned, it is good news for the dry bulk ships owners that transport coal from America via long-haul voyages to Asia.
According to ship brokerage BRS on Thursday: “Demand to ship coal has been a good support for the dry bulk market over the first half of the year”. “Despite coal demand in Europe and North America resuming its downward trend, Asia has provided an offset as demand continues to grow there.”
The IEA predicted in its recently released midyear outlook that seaborne coal volumes would probably reach 1,335,000 million metric tons this year, upwards of 1,331,000 tons in 2019.
Based on BRS estimates, coal shipping demand measured in ton-miles (volume multiplied by distance) increased by 9% in January-July compared to the same period last year.
Global coal demand will pick up and stand at 8.39 million tons this year, a slight rise from last year’s all-time high as estimated by the IEA. China, India, and Southeast Asia will consume some 75% of the produced coal (3 out of 4 tons). China’s share alone in the coal global consumption stands at 56%.
“As Europe cuts down on its coal-fired power generation to be in line with its green energy transition, China and India have continued to add further capacity at levels that far exceed the current pace of power plant retirements,” noted ship brokerage SSY.
Touching upon the average lifetime of a coal power plant, SSY stated that 86% of Chinese coal plants are less than 20 years old, and 52% are 10-20 years old. Given that the average lifetime for this type of plants is 40 years, “a full capacity phaseout like the one targeted by Europe is unlikely to be replicated”.
As for the supply, the IEA anticipates global coal production to hit a new record this year, topping last year’s figure of 8.63 million tons, with China, India and Indonesia consuming over 70% of the total.
Having once been the world’s largest coal producer, the U.S. has fallen down the ranks. The country currently produces less than half the 2008 peak. America’s exports, however, are on the rise. More production is being sold overseas due to smaller domestic demand in the wake of environmental regulations and cheap natural gas.
According to the prognosis of the U.S. Energy Information Administration (EIA), the country will export 90 million tons of coal in 2023, 16% more than 2022. Likewise, there will be a rise in exports to 94 million tons, in 2024.
