In the next year, pessimism was
confounded when China’s coal imports
increased strongly and, despite a downturn
in India, the Asian total saw a partial
recovery of 3% to 883mt. Doubts about
prospects for extending the rebound
proved misplaced in 2017, which saw a
further but stronger advance of 49mt (6%)
to a new record high volume estimated at
932mt. India’s purchases continued to
decline last year, but in other countries the
picture was very positive.
Four-fifths of Asia’s seaborne coal
imports consist of steam (or thermal) coal
grades, chiefly destined for use in the
electricity generating industry. Cement
production and other manufacturing
processes are also sizeable consumers. The
remaining one-fifth is comprised of coking
coal used in the steel industry by blast
furnace mills making pig iron.
The largest coal buyers in Asia — China,
Japan, India, Korea and Taiwan — need
imports of both types, reflecting either an
absence of domestic supplies or insufficient
quantities available. In India and China
indigenous coal from domestic mines is
produced in enormous quantities and
satisfies a large part of the market. Other
countries, such as Japan and Korea rely
wholly or almost wholly on imported
Coal imports into Asia benefit from
progress in economic activity across the
region, and broadly positive effects on
energy demand. Strengthening electricity
generation and steel production are
However the impact can be diluted or
masked by other changes. Large increases
or decreases in domestic coal supplies, and
domestic price variations, is one prominent
aspect. Changes in alternative energy
supplies — hydro-power, natural gas,
renewable energy from wind or solar
sources, and nuclear — also are
increasingly visible in the power generation
A recent report by the International
Energy Agency estimated that in 2017 over
two-thirds of the global 3% rise in
electricity generation occurred in China and India. The same report also
commented that global coal demand
increased marginally by 1% after two annual
declines, driven by stronger coal-fired
power generation, mostly in Asia.
VARIATIONS AMONG IMPORTERS
China’s seaborne coal imports (thus
excluding overland volumes mostly from
Mongolia) are again the biggest among
individual Asian importing countries. At an
estimated 217mt in 2017, up by 9% from
the previous year, these are still well below
the peak seen five years ago before the
steep fall, however.
Several influences are relevant. Coal
consumption in China last year picked up
for the first time since 2013, increasing
marginally by 0.4%. Production from
domestic mines also rose, by 3% to
3,520mt. The coal market was restrained
by anti-pollution measures designed to
improve air quality in cities, placing more
emphasis on cleaner energy sources. As a
proportion of total energy consumption,
coal usage reportedly declined by 1.6
percentage points to 60.4%, while clean
energy including gas and renewables rose
by 1.3 percentage points to 20.8%.
In India seaborne coal imports seem to
have continued on a downwards trend
since the peak four years ago. The 2017
total, which one estimate puts at 191mt,
was 4% lower compared with the previous
twelve months. But definitive figures are
not yet available and another estimate
suggests a much smaller 1% decrease.
Weakness has mainly reflected a better
performance from the domestic mining
industry, and success in boosting coal
output sufficiently to keep pace with or
exceed consumption trends.
Japan’s continuing high but quite stable
imports, which were up by 2% to 187mt in
2017, have been greatly influenced by
heavier reliance on coal as a power station
fuel in recent years. Since the severe
earthquake and tsunami in 2011 and the
associated Fukushima nuclear power
station disaster, most nuclear plants have
remained closed. Political opposition has
resulted in only a few reopening, although
more are scheduled to resume operating.
Seaborne coal imports into South Korea
last year expanded strongly after flatlining
for several years. The 2017 total rose by
13%, reaching 141mt. Higher steam coal
purchases apparently comprised all the
incremental volume. Coal-fired power
station usage was boosted by shortfalls in
electricity supplies from nuclear plants. In
Taiwan, imports rose by 8% last year
A group of smaller importers has been
contributing an expanding proportion of
the Asian regional total. From around 80mt
annually, during the past three years annual
coal imports by this group have risen
cumulatively by over 50%, including an
estimated 15% increase in 2017, to 126mt.
Within this category Malaysia, Philippines,
Thailand and Vietnam have seen especially
notable growth, but Hong Kong’s volume
MORE GROWTH AHEAD?
Forecasts of longer term growth in Asia’s coal imports arguably are difficult to justify, given the prominence of downwards pressures. It is not even clear whether a flat trend can be achieved. Nevertheless for the immediate future, this year and into 2019, prospects are more finely balanced. A downturn does not seem inevitable and it is at least conceivable that further growth, albeit probably modest, will occur.
One aspect complicating the forecasting process is political influences in several coal consuming and importing countries. Some changes in government policies affecting imports are foreseeable as possibilities, but the probability of introduction, the magnitude of changes, the precise timing, and their effectiveness are almost unpredictable. Other policy changes may be unforeseen.
In recent years and probably in the future as well, this aspect has been especially evident in China and India, although is not exclusively limited to these countries. Together, the two major importers receive over 400mt annually, comprising about 44% of Asia’s seaborne coal imports and more than one-third of the global volume. Consequently any large change in their purchases has a wide impact.
Particular uncertainty about government policy relates partly to environmental measures directly targeting coal imports. Other policy changes indirectly influencing imports are often more prominent. These affect market drivers such as coal consumption, which can be determined by added emphasis on alternative energy sources, and by limiting or promoting domestic coal production where this resource is available.
Given the wide potential for unpredictable policies to affect coal trade, in addition to the normal commercial imponderables relevant to all seaborne commodity movements, the usefulness of firm forecasts may appear questionable. Much guesswork is inescapable, and the end result is perhaps more a statement of a viewpoint than a reliable prediction.
The Bulk Shipping Analysis calculations for 2018 Asian coal imports shown in the table were prepared against this background. Although the direction of change could be up or down, a moderate 2% increase raising the regional total to about 950mt seems quite realistic. Whether some individual components, especially China and India, will see upwards changes and whether these are as little as 2-4%, is unclear. Marginal or no change in Japan, Korea and Taiwan is also a debatable outcome.
Elsewhere, prospects for some smaller importers are more solidly positive, perhaps over a number of years ahead. A large part of Asia’s incremental coal imports expected in the current year is concentrated within this group, which is predicted to see an 11mt or 7% rise, to 135mt.
One relatively minor importer with potential for becoming more significant is Vietnam. Seaborne steam coal imports into this country are estimated to have grown over the past few years, from a minimal 1–2mt annually to reach about 10mt in 2017. Expanding coal-fired power station capacity could greatly boost volumes during the decade ahead. Port facilities are under development and last September DCI magazine reported a new floating transfer terminal being positioned in South Vietnam to receive coal imports arriving in large bulk carriers.
In a detailed study published a few months ago, the International Energy Agency focused on energy demand in the ten Asean countries of southeast Asia. Energy consumption in this group seems set to grow strongly over many years, and coal is expected to have a major and expanding role in the trend. Foreseeable electricity demand expansion, with coal- fired power stations contributing a large part of the extra power generation, is a feature and a number of countries will become increasingly reliant on coal bought from foreign suppliers.
Advantages derived by the shipping industry from participation in Asian coal import trades are restricted by the large part comprising short-haul movements from major supplier Indonesia within the region, in close proximity to the importing countries. Last year Indonesia reportedly exported steam coal totalling 319mt, up by about 2%, much of which was purchased by neighbouring buyers. Additionally a large volume of low-grade lignite exported was mainly bought by China. Some forecasts suggest that the export total could increase again in 2018.
A proposal by the Indonesian Government has complicated the outlook for the country’s coal exports. It has been proposed that transportation of several key export commodities should be handled by domestic shipping companies. Plans for implementation of the regulation in late April this year appear to have been postponed. But opponents argue that, if introduced eventually, it has the potential to raise transport costs substantially and adversely affect the competitiveness of Indonesian coal in the world market.