“During the first 10 months of 2024, coal shipments to advanced economies fell 6% y/y. Import demand weakened, particularly in Europe, where it fell 22% y/y as countries continued to decarbonise their electricity generation. At this rate, shipments to advanced economies will reach a 15-year low in 2024,” says Filipe Gouveia, Shipping Analyst at BIMCO.
Thermal coal shipments fell by 9% y/y as electricity generation from coal decreased, especially in Europe. In Asian advanced economies, shipments only fell 4% y/y, as higher temperatures increased electricity demand for air conditioning. Coking coal imports in advanced economies rose 1% y/y, even as steel production marginally decreased. Coking coal is used to produce virgin steel but not recycled steel.
Shipments to advanced economies are falling for the second consecutive year in 2024, but their share of global coal shipments has been falling for longer. In 2009, the last time the volumes were this low, these economies were the destination of 57% of global coal shipments compared to only 30% today.
“The volume loss so far in 2024 is equivalent to a 0.5% decrease in global dry bulk cargo, primarily affecting the capesize market. Despite this, global coal shipments have still risen, supported by strong shipments to emerging economies,” says Gouveia.
Panamax and capesize segments are used to ship coal to these economies, accounting for 53% and 33% of shipments respectively. Between January and October, cargoes on panamax ships only fell by 2% y/y, while falling 11% y/y on capesizes. The reduction in cargo volumes to Europe and a surge in capesize freight rates likely contributed to a comparatively higher use of panamax ships.
On the origin side, shipments from Russia, the US and South Africa fell by 18%, 10% and 34% y/y respectively while shipments from other exporters remained stable. Logistical challenges in Russia and South Africa limited exports, while the US increasingly exported to emerging economies amid weaker demand from Europe.
Looking ahead, both thermal and coking coal imports in advanced economies are expected to continue falling due to decarbonisation. Investment in electricity generation from renewables, and in recycled steel production, is expected to increase.
“Import demand in emerging economies could also weaken soon. Both electricity generation from renewables and domestic mining in importing countries are on the rise. As decarbonisation efforts increase, global coal shipments are forecast to fall 1-2% in 2025,” says Gouveia.
