Global seaborne coal trade volumes in 2021 are expected to grow more than 5% from 2020, with a further increase seen for 2022 despite decarbonization programs, Assocarboni, the General Association of Coal Operators, forecast May 10.
"Seaborne trade will start to grow again: a 5% increase in volumes traded is expected by the end of 2021, with a final total figure of 1.21 billion mt," Rome-based Assocarboni President Andrea Clavarino told S&P Global Platts in an emailed statement. "In particular, thermal coal should amount to 947 million tons (+ 4% compared to 910 million in 2020) and metallurgical coal to 263 million tons (+6% compared to 247 million in 2020)."
"For 2021, we are witnessing a sharp rise in the prices of thermal and metallurgical coal, driven by the strong recovery of the economy and expectations of an exit from the pandemic," Clavarino said.
Seaborne metallurgical coal delivered prices to China jumped to four-year high May 10 in the premium coking coal segment on firm buying interest and tight spot availability, as Chinese steel production levels remained high and the outlook for commodities continued generally bullish.
S&P Global Platts assessed Premium Low Vol steady at $109/mt FOB Australia, while PLV CFR China was up $10/mt at $248/mt CFR China May 10.
Southeast Asia drives demand
The association, which groups together international coal users, traders and handlers, noted that demand for coal has shifted towards Southeast Asia and the increase in seaborne trade forecast for 2022 is driven by markets including Bangladesh, Malaysia, Pakistan, the Philippines and Vietnam. "Growing demand for coal from Bangladesh will keep import volumes high," Clavarino said.
2020 saw a 10% on-year decline in seaborne coal trade volumes to 1.16 billion mt -- the first fall in volumes for 10 years -- as COVID-19 hit supply chains, countries and companies accelerated decarbonization programs and a commercial spat limited trade between Australia and China.
"We believe that the decline in trade volume last year was due to the pandemic and to the reduction of imports in Europe, where the decarbonization process has begun, but gradually and only for some of the European countries," Clavarino said.
Italian coal phaseout
Assocarboni highlighted the case of Italy, which has planned to phase out the use of coal in electricity production by 2025, and which already saw dramatic falls in coal imports in 2020.
Italy's thermal coal imports slumped last year to 5.3 million mt -- down 29% from 2019's 7.5 million mt -- while its imports of metallurgical coal and PCI, at 2.35 million mt, were down 22% from 3 million mt in 2019.
"Coal phase-out should be progressive over time and closely connected to structural operations in the replacement production capacities and in the transmission, distribution and energy storage systems, in order to not compromise the competitiveness and safety of the Italian Electric System," the association said.
Assocarboni believes that the Italian electricity system should increase the share of renewable energy in its energy mix and hopes that the country will be able to correctly address the gradual procedures for the closure of the plants, as already done in other European countries.
"In a world which will continue to produce electricity from coal, the mentioned Italian phase out by 2025 will bring [only]modest benefits to the climate change reduction, as the CO2 emissions due to Italian coal-fired plants account for 0.04% of the global CO2 emissions," it said.
While Europe in 2020 generated electricity mainly from coal (13.3%) and nuclear (24.2%), cutting the costs of electricity bills by an average 30%, Italy lagged behind, being the only country in the world without nuclear power and with the lowest share of coal use (10%), according to the association.
China, Germany, Japan, India, South Korea and Taiwan will continue to use a mix of coal and nuclear to produce electricity beyond 2025, it noted.
"Coal confirmed its leadership as leading fuel for electricity generation also in 2020, accounting for 38% of overall production," Assocarboni said.
