Declining long-haul coal shipments from the Atlantic basin to Asian buyers, which are increasingly importing from more nearby regions including Russia, is weighing on the dry bulk market.
Coal flows from Colombia, South Africa, and the US to India and China dropped to 2.3mn t in July, down by 1.5mn t compared with June and well below the five-year average of 4mn t, according to data from DBX Commodities.
Since mid-June, rates for coal-carrying Capesize bulkers in the Atlantic basin have dropped by over 25pc.
The rate for a US east coast to India Capesize was $37.60/t yesterday, a drop of 27pc from $51.30/t on 17 June. The US east coast to Rotterdam Capesize rate was $15.40/t, a drop of 25pc in the same period.
Reduced port congestion in the Asia-Pacific is allowing more tonnage back into the global supply following the lifting of Covid-19 lockdowns in major Chinese ports, exacerbating the decreased demand for the larger bulker in the Atlantic.
Indian and Chinese coal purchases from Russia and Indonesia are helping to compensate for the drop off in Atlantic basin supply, but that is failing to counteract the downward pressure. Russian coal deliveries to the two countries were 7.7mn t in July, after hitting at least a seven-year high in June and well above the five-year average of 3mn t. India and China imported 25.8mn t of Indonesian coal in July, compared with its five-year average of 18.4mn t.
While India and China are turning away from Atlantic basin coal, European importers are turning toward it. But similarly, this is failing to counteract the downward pressure on the market.
Coal flows from Colombia, South Africa, and the US into Europe increased by 236,000t from June to July to above 4.2mn t, well above July's five-year average of 3.2mn t, according to the data.
