Baltic Exchange reported that coal carriers can look forward to a 26 million tonne increase in movements of the black rock by sea this year, although that increase springs off the lower baseline of pandemic-struck 2020. Statistics from global energy analyst IEA put 2020 trade volumes at a 10% retraction, equivalent to around 150 million tonnes, the largest drop ever, with seaborne coal trade hardest hit. In that context, the additional 26 million tonnes predicted for 2021 is worthy of little celebration. IEA’s director of energy markets and security Keisuke Sadamori said “The Covid-19 crisis has completely reshaped global coal markets. Before the pandemic, we expected a small rebound in coal demand in 2020, but we have since witnessed the largest drop in coal consumption since the Second World War. The decline would have been even steeper without the strong economic rebound in China, the world’s largest coal consumer, in the second half of the year.”
All this comes on the top of a bumper year for global coal trade in 2019, when it reached its highest ever volume at 1,445 million tonnes, a 0.8% increase from the previous year, with the vast majority of coal traded in 2019, 92% and 1,331 million tonnes, moved by sea. Countering this, exports in 2021 are expected to reach 1,323 million tonnes this year. This means that export volumes will remain well below the pre-Covid volumes.
In terms of demand, a rebound is expected this year, and while it is forecast to be short-lived there is little sign that the world’s coal consumption is set to decline substantially in the coming years. If the world economy recovers, global coal demand is expected to rise 2.6% in 2021. China, India and Southeast Asian economies account for most of the growth, but there could be surprise increases in coal consumption for the US and Europe, their first demand rises in nearly a decade. However, global coal demand in 2021 is still forecast to remain below 2019 levels and could be even lower if the report’s assumptions for the economic recovery, electricity demand or natural gas prices are not met
The IEA expects the future of coal will largely be decided in Asia. China and India currently account for 65% of global coal demand, which rises to 75% if Japan, Korea, Taiwan and Southeast Asia are included. By 2025, ASEAN will become the third-largest coal-consuming region, surpassing the US and theEU.