Tuesday, October 3, 2023
HomeHeadlinesIEA: China in no rush to buy Australian coal amid global supply


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

IEA: China in no rush to buy Australian coal amid global supply

China is in no rush to buy thermal coal from Australia even after lifting the import ban, as the former still has enough options globally to meet its requirements, particularly for medium calorific value fuel, a senior analyst from the International Energy Agency told S&P Global Commodity Insights.

While the Australian coal is competitive compared to other origin material, continued discounts on Russian coal for a cost-sensitive market like China and easy availability of Indonesian coal leaves the world’s largest importer with decent choices, said Carlos Fernandez Alvarez, IEA’s acting head of gas, coal and power markets division, in an interview.

“We’ll see a variety of coal qualities going to China, and hence, opportunities for some Australian coal, but we also have discounted Russian and Indonesian coal too. I don’t see a rush to get thermal coal from Australia,” Alvarez said.

S&P Global reported Jan. 4 that China is close to lifting a more than two-year-old unofficial ban on Australian thermal and coking coal imports for its power and steel plants, as the country looks to expand its procurement origins and reduce trade flow disruptions following the Russia-Ukraine war.

China’s three state-owned power plants — China Datang Corp., China Huaneng Group Co., China Energy Investment Corp. — and steel producer China Baowu Steel Group Corp., have reportedly received intimations from the government to import Australian coal.

However, according to Alvarez, the market for high-CV coal will still remain tight due to the superior quality of the Australian coal preferred worldwide and China opening it’s doors for the same.

“Thermal coal market is becoming more segmented. If you go for high quality 6,000 kcal/kg NAR Australian coal, the market will still be tight in 2023; the war has also contributed to the tightness in high-CV market,” he said, adding for other grades, the prices will likely be more relaxed this year.

European demand to remain steady

Amid the imbalance that the Russia-Ukraine war has created in the global trade flows, European demand for thermal coal in 2023 is likely to remain static, or increase marginally, as recovery in hydropower and nuclear generation, and continued push for renewables will keep a lid on coal demand, according to Alvarez.

“If hydro recovers as it is happening with decent water levels and nuclear reactors also get back, coal demand in 2023 will basically be in same levels as in 2022 despite all the noise about new plants coming up and capacity being increased etc,” Alvarez said. “Unless there is some disaster in hydro or nuclear space, I don’t see major demand coming from Europe.”

In a report last month, IEA said redoubled efforts to improve energy efficiency and expand renewables will see EU coal generation and demand return to a downward trajectory as soon as 2024. The agency expects coal consumption in EU to decrease from 478 million mt in 2022 to 371 million mt in 2025, although uncertainty surrounding the gas market could affect the outlook for coal demand.

China, India soft takers

Stating that even as coal prices are unlikely to increase as much as they did in 2022, Alvarez said he expects import from China and India declining in 2023, or at best remaining at same levels, with overall demand in international markets shrinking.

India and China have been beefing up domestic production to meet their growing energy needs and insulate themselves from rising volatility in global coal prices, a phenomenon widely seen after the pandemic and the Russia-Ukraine war. India’s domestic coal output over April-December increased 16.39% on the year to 607.97 million mt. The country is targeting an annual output of 1.29 billion mt in financial year 2025-26.

China’s January-November raw coal output was up 9.7% on the year to 4.09 billion mt, while imports over January-November were down 10.37% on the to 262 million mt.

While domestic production has been on a rise in these two countries, Alvarez believes rapid expansion plans on renewables will also continue to eat the space of thermal coal in the long run. “India and China are seeing largest expansion plans for renewables. Once a solar panel is installed, you have 20 years of production coming out of it. We have seen this happening in Europe in the last decade, except in the last two years. China will follow soon and India a bit later.”

Source: Platts

Related Posts


Finance & Economy
Shipping News

Scorpio Tankers takes options to buy back over 20 ships

In a relevant SEC filing, Scorpio Tankers announced extensive vessel repurchases via sale and leaseback arrangements, including for the 2016-built LR2 product tanker STI...

TOP Ships Announces Reverse Stock Split

TOP Ships announced that it has determined to effect a 1-for-12 reverse stock split of the Company’s issued common shares. The Company’s shareholders approved the...

Carnival Earnings Outlook Misses While Fuel Costs Near 15-Year High

Carnival Corp. posted a profit for the first time since 2020 but issued a fourth quarter earnings outlook that missed Wall Streets’ expectations as...

Sphinx Investment Corp Increases Stake in OceanPal

On September 28, 2023, an OceanPal SEC filing revealed that Sphinx Investment Corp. had raised its ownership in OceanPal, now holding a substantial stake...

Star Bulk Announces the Repurchase of 10 Million of Its Common Shares

Star Bulk announced that it entered into a Repurchase Agreement (with OCM XL Holdings, LP, a limited partnership incorporated in the Cayman Islands, pursuant...

MSC to buy 50% stake in Italian passenger rail group Italo

Shipping group MSC has entered into a binding agreement to acquire a 50% stake...

Higher capesize rates drive Baltic index higher

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Baltic index snaps 4-day winning streak as capesize rates slip

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Baltic index scales 11-month peak on strong capesize rates

The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry...

Baltic index scales over 9-month high on capesize surge

The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry...

Ukraine: 5 More Cargo Ships Head For Black Sea Ports – report

Five more ships are on their way to Ukrainian sea ports using a new corridor opened to resume predominantly agricultural exports, an alternative arrangement...

Piraeus Port reports strong H1 2023 results

The Piraeus Port Authority SA, which operates Greece’s biggest and busiest port, reported a 48.8-percent increase in pre-tax earnings for H1 2023 – 49.4...

Greece names Thessaloniki port operator preferred bidder for Volos port

Greece’s privatisation agency has named the operator of Thessaloniki port as the preferred bidder for acquiring a 67% stake in the port of Volos,...

Drewry: Port Throughput Index Down 2.1% in July

The Global Container Port Throughput Index fell 2.1% MoM in July 2023, with the small rises recorded in Africa and Oceania having been insufficient...

Vopak: Agreement with Infracapital on sale of Rotterdam chemical terminals

Vopak announces that it has reached an agreement with Infracapital on the sale of its three chemical terminals in Rotterdam (Botlek, TTR and Chemiehaven)...