Decline in Advanced Economies’ Coal Imports Marks Historic Shift in 2024

Filipe Gouveia, a shipping analyst at BIMCO, shared insights into the recent decline in coal imports among advanced economies, with thermal coal shipments dropping by 9% year-over-year as coal-based electricity generation waned, especially in Europe. Meanwhile, Asian advanced economies saw only a 4% reduction due to increased electricity demand driven by higher temperatures and the need for cooling.

While overall coal imports fell, coking coal imports in advanced economies rose by 1% year-over-year, even as steel production saw a slight decline. Coking coal remains essential for producing virgin steel, though it is not required for recycled steel.

In the first ten months of 2024, coal imports to advanced economies experienced a 6% decrease, with European demand plummeting by 22% as decarbonization initiatives gained traction. At this pace, total shipments to these economies are expected to hit their lowest level in 15 years.

This marks the second year of consecutive declines in coal shipments to advanced economies, though their global share has been shrinking for longer. Back in 2009, advanced economies accounted for 57% of global coal imports, a figure that has dropped to just 30% in 2024.

Gouveia highlighted that this decline equates to a 0.5% reduction in global dry bulk cargo volumes, significantly affecting the capesize vessel market. However, rising demand from emerging economies has kept overall global coal shipments afloat.

Panamax and capesize vessels remain the primary carriers of coal to emerging markets, covering 53% and 33% of shipments, respectively. Between January and October, panamax shipments saw only a 2% decline, while capesize shipments dropped by 11%, influenced by reduced European demand and a surge in capesize freight rates, leading to greater reliance on panamax vessels.

From the exporting side, coal shipments from Russia, the United States, and South Africa dropped by 18%, 10%, and 34% year-over-year, respectively, primarily due to logistical challenges in Russia and South Africa and shifting U.S. exports toward emerging markets as European demand softened.

Looking forward, advanced economies are anticipated to continue reducing both thermal and coking coal imports amid ongoing decarbonization efforts. Investments are expected to rise in renewable energy sources and recycled steel production. Emerging economies may soon see a similar trend as they ramp up renewable electricity generation and increase domestic coal mining. With these global shifts, Gouveia concluded, coal shipments worldwide are likely to decline by 1-2% in 2025.

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