LAUNCESTON, Australia- Thermal coal’s rally to 13-year highs in Asia has done little to dampen overall demand, but the region is increasingly becoming split between those countries willing and able to pay high prices, and those who are cutting now unaffordable imports.
Imports of thermal coal in wealthier north Asian countries, such as Japan, South Korea, China and Taiwan are set to record month-on-month increases in August, with some reaching the most this year, according to vessel-tracking and port data compiled by commodity analysts Kpler.
However, the less-developed nations of south Asia, such as India, Pakistan and Bangladesh are likely to see lower imports of the fuel used to generate electricity.
Prices of thermal coal have surged in Asia since September last year, when demand started to recover after the initial economic lockdowns across the region to try and combat the coronavirus pandemic started to lift.
The weekly index for benchmark high-grade Australian thermal coal at Newcastle port rose to $170.74 a ton in the week to Aug. 27, according to assessments by commodity price reporting agency Argus.
The fuel has surged 268 percent since its 2020 low of $46.37 a ton in early September and is trading at the highest since July 2008, closing in on the record of $195.25, according to Argus data.
China, the world’s biggest coal importer, and second-ranked India, have tended to buy more lower-grade Indonesian coal, with Chinese utilities using it as a blend with domestic coal with higher impurities, while India bought it because it was cheaper and geographically closer than alternatives.
That trade has switched around in recent months given Beijing’s unofficial ban on importing Australian coal as part of an ongoing political dispute with Canberra.
While the coal flows around Asia, the top-importing region, have been affected by China’s prohibition on Australian cargoes, the main story so far in 2021 has been one of strong demand amid increasing electricity production as economies start to recover from the pandemic.
But the recovery has been uneven, and may be starting to show the impact of the surge in prices.
China’s imports of thermal coal in August are estimated by Kpler at 24.35 million tons, up from 20.57 million in July and the highest so far this year.
Japan, the world’s third-biggest coal buyer, is expected to see thermal coal imports of 10.48 million tons in August, up from 10.18 million in July and the strongest month since January.
South Korea is expected to have shipped in 7.40 million tons in August, and while this is down from July’s 8.49 million, it is still the second-highest month this year, according to Kpler data.
Taiwan’s August imports are estimated at 6.33 million tons, up from July’s 5.12 million and the highest since Kpler started compiling coal data in January 2017.
In contrast to the strength in north Asian buyers, imports in south Asia look set to fall.
India is forecast to import 8.19 million tons of thermal coal in August, down from July’s 8.72 million.
These past two months have been the weakest for India’s thermal coal imports since June last year, according to Kpler data.
Pakistan’s August imports are on track for 1.27 million tons, down from July’s 1.53 million, while Bangladesh is expected to import just 163,015 tons in August, down from July’s 212,612 tons.
Bangladesh’s August imports are the weakest since May last year and are sharply lower than the recent peak of 1.46 million tons from December last year.
