Global thermal coal seaborne shipments have totaled 806 MMT for the first ten months of 2021, up 10.0% YoY, though lower by 2.1% over pre-pandemic levels in 2019. Electricity demand has seen a sharp rebound, as markets around the world have shed pandemic-induced restrictions and returned to business as usual.
Following a sharp contraction due to the pandemic in 2020, China’s appetite for thermal coal shipments has increased significantly this year. Based on our cargo tracking, China’s imports of thermal coal have totaled 222.2 MMT for the first ten months of 2021, up 32.2% YoY and higher by 14.3% over the same period in 2019.
Despite a boom market in 2021, the long-term outlook for thermal coal is still relatively weak. According to our projections, global thermal coal shipments are expected to decline progressively in the coming years as economies switch over to alternate fuels for power generation to meet their climate action targets. In our base case, we are forecasting a net decline of 9.6% in thermal coal shipments by 2025, over 2021 baseline with the current year being the peak. However, if more aggressive climate action targets are implemented in next 2-3 years, especially in China and India, the outlook could be bleaker.
The bearish outlook for thermal coal implies a decline in Cape and Panamax shipments in the long-term, though it could be partially offset by longer distance trades if China continues its ban on Australian coal. We also expect growth in other trades to more than offset these losses in vessel demand.