Unaffected by the decarbonization process, coal seaborne demand is expected to keep rising in the next five years

On April 22, 2021, Beijing time, at the Earth Day Leaders' Climate Summit, Chinese President Xi Jinping stated that China looks forward to working with the international community, including the United States, to promote global environmental governance. China will strictly control coal power projects, strictly control the growth of coal consumption during the "14th Five-Year Plan" period, and gradually reduce it during the "15th Five-Year Plan" period.

China is the world’s largest coal consumer. According to this goal, it can be inferred that, on the one hand, China’s coal demand may reach its peak at the end of the 14th Five-Year Plan period, around 2025; on the other hand, because coal is very important to China’s economy Therefore, if China’s economic growth target remains above 6%, it will be difficult for coal demand to drop at the beginning of the 15th Five-Year Plan period.

At the meeting, many heads of state also made many new statements and actions, releasing benign signals to enhance global cooperation. However, if only coal trade is concerned, the current efforts to reduce emissions proposed by various countries are far from allowing its demand to begin to decline.

Therefore, as Chinese buyers have a central position in the coal trading market, the seaborne volume of coal will remain at a relatively high level in the following years.

Although the new crown epidemic has caused a decline in coal shipments, the strong economic recovery of various countries, especially China, has caused a strong rebound in shipments. Data from Oceanbolt, a dry bulk tracking platform, shows that although monthly coal exports are far below the long-term linear trend, they are still close to its five-year average.

China, India and Japan are the world's top three coal importers, and their combined seaborne coal imports account for more than half of the world's total imports. At present, only Japan is likely to reduce its dependence on coal in the short term. China and other Asian countries such as India and Vietnam have a tendency to increase coal consumption. Vietnam has recently put into use new coal-fired power plants, which may offset Japan's reduced consumption. Therefore, although coal has fallen out of favor in many developed countries, it is still hot in developing countries.

Continued strong demand coupled with tight supply has kept coal prices near the two-year high set at the end of March. Coal mine safety inspections and Inner Mongolia’s "Inner Mongolia Autonomous Region Energy Bureau 2020 Work Plan" proposed-Inner Mongolia will achieve a raw coal output of about 1 billion tons by 2020, strictly implement the "three districts and three lines" management and control requirements, and prepare the district's coal development layout plan. New coal mines are no longer opened in the core area. Ordos and other regions have rationally arranged development timing and intensity, and made every effort to stabilize coal production capacity, output and price-the domestic coal supply shortage caused by the domestic coal supply has also made coal prices far higher than the 500 to 570 per ton set by the National Development and Reform Commission. yuan. The unofficial ban on Australian coal imports imposed last year also has a certain effect.

Despite rising coal prices in China, the Chinese government is still unlikely to relax its trade policy with Australia. There is no obvious sign of reconciliation between the two countries, and it may even worsen. It may be that the degree of rigidity in bilateral relations has reached its limit, so any further pressure will not cause greater damage to the trade between the two countries; it may also be that Australia's iron ore exports are currently safe because there are no substitutes for the time being at least.

The number of coal ships going to China from the Port of Australia has been reduced to zero, and at the same time, coal exports from the United States have increased substantially. According to Oceanbolt's data, although the US exports only a small part of Australia's, it has grown from little growth in October last year to a gradual increase. There are concerns that although China’s coal imports from the United States have reached levels similar to those in the past, and the trade is usually volatile, it is expected that the existence of the first phase of the trade agreement that has been implemented for a year may prevent history from repeating itself and maintain U.S. coal. Stable flow to Chinese ports.

At the same time, as Australia is looking for alternative markets farther away, most of the US coal will be shipped from eastern coastal ports or ports in the U.S. Gulf of Mexico, and the demand for ton-miles has increased considerably.

Oceanbolt's data also shows that Panamax recently dominated US coal exports to China, accounting for about three-quarters of shipments since October.