Thursday, February 2, 2023
spot_img
HomeHeadlinesAsia coal demand surge in stark contrast with U.N. climate warning

Subscribe

To our FREE newsletter
Get all the latest maritime news delivered straight to your inbox.

Asia coal demand surge in stark contrast with U.N. climate warning

The latest U.N. report makes it clear that coal must exit global energy systems if there is to be any chance of avoiding severe climate disruptions.

The problem is that for much of Asia, it’s still the go-to fuel in periods of high demand, and this doesn’t appear to be changing at anything like the required pace.

The U.N.’s Intergovernmental Panel on Climate Change (IPCC) report released on Aug. 9 put the blame for weather extremes on human activity, and said rapid action was needed to limit the damage.

“This report must sound a death knell for coal and fossil fuels, before they destroy our planet,” said U.N. Secretary-General António Guterres, adding the report is a “code red for humanity.”

The blunt warnings of the IPCC could not stand in starker contrast to the reality of surging coal demand in Asia, the world’s top producing, consuming and seaborne market for the polluting fuel.

Coal demand, and prices, have been stoked by a recovery in power generation as the region’s economies emerge from the coronavirus pandemic and as warm temperatures boost the use of air-conditioning.

While this is likely a short-term situation, Asia is still the epicentre for the construction of new coal-fired generators, with several countries including China and India currently building massive capacity and advancing plans to build even more.

And even where coal-fired generation plans have been cancelled or postponed, the alternative is more often than not to switch to natural gas, often in the form of energy-intensive liquefied natural gas (LNG), rather than renewables such as wind, solar and battery storage.

The scale of the problem in Asia can be seen in the recent volumes of seaborne coal in the region.

A total of 80.32 million tonnes of all grades of coal was discharged at Asian ports in July, according to vessel-tracking and port data from Refinitiv.

This was up from 80.16 million in June and 78.58 million in May, and was the strongest month since January, when winter demand was at its peak.

The total for the three months to July was 240.06 million tonnes, up 7.8% from the 222.79 million for the same three months in 2020.

That extra 17.27 million tonnes of demand in the three months to July helps explain why coal prices have been on a tear in recent weeks.

Benchmark high-grade Australian thermal coal, the type favoured by Asia’s long-standing importers Japan, South Korea and Taiwan, rose to a 13-year high of $153.41 a tonne in the week to Aug. 6, and has tripled since its 2020 low of $46.37 in September.

Lower-quality Indonesian thermal coal, which has been bought heavily by China in the wake of Beijing’s ban on buying Australian cargoes, rose to $69.53 a tonne in the week to Aug. 6, the highest on record since commodity price reporting agency Argus started assessments in 2008.

CHINA DEMAND

China has been leading the current demand surge for coal, partly as a result of closing some domestic mines for safety checks.

China, the world’s biggest producer, consumer and importer of coal, brought in 30.18 million tonnes in July, a seven-month high, according to official data.

Data from commodity analysts Kpler also showed strong gains in imports in Japan, the region’s third-biggest buyer, with 15.39 million tonnes arriving in July, the most since January.

Fourth-ranked South Korea imported 11.62 million tonnes in July, the most since December 2019, while number five Taiwan brought in 6.78 million, the highest since September 2020, according to Kpler.

Only India among major importers saw a decline in July, with the world’s second-biggest buyer importing 15.32 million tonnes, the lowest since July last year, as the South Asian nation battled a new outbreak of the coronavirus.

While coal demand in Asia is being driven by short-term factors that may ease in coming months, the longer-term picture is likely to prove incompatible with the IPCC report.

Despite making longer-term commitments to net-zero carbon emissions, several Asian countries are still pursuing large coal-fired building programmes.

China has 96.7 gigawatts (GW) of coal-fired generation currently under construction, according to data from the Global Energy Monitor.

To put that figure in perspective, the amount China is building exceeds the coal generation currently operating in every other country in the world, except for India and the United States.

Japan has 6 GW of coal-fired power under construction, while South Korea has 7.3 GW being built, Bangladesh has 4.1 GW and Pakistan 3.3 GW.

Asian countries with large domestic coal mining sectors are also ploughing ahead with new plants, with Indonesia currently building 11.8 GW of capacity and India 34.4 GW.

Given that coal-fired power plants would normally expect to operate for at least 40 years, it’s clear that Asia is a long way from heeding the IPCC’s call for action.

Source: Reuters

Related Posts

Video

Finance & Economy
Shipping News
Ports

Wartsila: A challenging year with strong annual growth

HIGHLIGHTS FROM OCTOBER–DECEMBER 2022 Order intake decreased by 24% to EUR 1,638 million (2,150)Service order intake increased by 6% to EUR 791 million (747)Net sales...

Hapag-Lloyd achieves extraordinarily strong result in its anniversary year 2022

On the basis of preliminary and unaudited figures, Hapag-Lloyd has concluded the 2022 financial year – in which it celebrated its 175th anniversary –...

Bahri sees profits soar in 2022

Saudi Arabia’s Bahri has seen its profits soar by over 400% in 2022 following a boom in tanker rates, boosting the shipping giant’s oil...

Euronav Files Second Arbitration Against Frontline

Euronav NV hereby informs its shareholders that on 28 January 2023 it has filed an application request for arbitration on the merits in relation...

Oaktree looking at block sale of existing shares in Hafnia Limited

OCM Luxembourg Chemical Tankers S.à r.l. which is ultimately controlled by funds managed by Oaktree Capital Management L.P. (the "Seller") has retained Fearnley Securities,...

Luxury Cruise Market Holds Much Promise For Greek & East Med Hidden Gem Destinations

The appeal of Greece and the East Mediterranean as an ideal region for luxury...

Baltic index falls to over 2-year low as larger vessel rates slide

The Baltic Exchange’s dry bulk sea freight index fell to its lowest since June...

Baltic index logs worst month in 3 years

The Baltic Exchange’s main sea freight index registered its biggest monthly percentage fall in...

Baltic index snaps 9-day losing streak as panamax, supramax rates rise

The Baltic Exchange’s main sea freight index snapped its nine-session losing streak on Tuesday,...

Cyprus shipping making waves – report

Cyprus shipping, the steady driver of the economy, is sailing for better times, having...

Luxury Cruise Market Holds Much Promise For Greek & East Med Hidden Gem Destinations

The appeal of Greece and the East Mediterranean as an ideal region for luxury cruising will be one of the main highlights of the...

Port of Los Angeles proposes cruise terminal project

The Port of Los Angeles is inviting comments on a draft Request for Proposals (RFP) for the future development of a new Outer Harbor...

Port of Long Beach Closes 2022 with Second-Busiest Year

The Port of Long Beach marked its second-busiest year on record by moving 9.13 million twenty-foot equivalent units in 2022, allowing for a return...

Hapag-Lloyd AG acquires share in J M Baxi Ports & Logistics Limited

Hapag-Lloyd AG signed a binding agreement today under which it will acquire 35% of J M Baxi Ports & Logistics Limited (JMBPL) from a...

Nigeria opens ‘game changer’ billion-dollar deep seaport

Nigeria opened a billion-dollar Chinese-built deep seaport in Lagos on Monday, which is expected to ease congestion at the country’s ports and help it...