Dry Bulk Market: Ships’ Sizes Converging in Some Coal Trades

Coal price fluctuations and the shifts in major routes, like the Australia-China one, has brought a significant shift in the dry bulk carriers’ sizes used, with a rise of smaller sizes in what were once Capesize “territory”. In its latest weekly report, shipbroker Intermodal said that “since the beginning of the year, there has been a significant decline on the Australian coal price. The API5 has decreased almost 56% reaching the region of $177.9/tonne during March from $403/tonne on the 2nd of January 2023. China had an official import ban in Australia lifted earlier this year, and this, combined with the lower coal prices, which reached levels before the war in Ukraine, can make Chinese importers to reinstate Australian imports. According to our data, there is an uptick in volumes, with 1.916 kt shipped in February and 3.328 kt in March 2023 up by 92% and 61% compared to February 2022 (152.6 kt) and March 2022 (366.5 kt) respectively”.

According to Intermodal’s Research Analyst, Mr. Fotis Kanatas, “as far as South Africa is concerned, the country has mixed coal shipments in China. For reference, South Africa shipped 731.5kt in February 2023 which is 55% higher than the same period last year (328.9 kt) and 235 kt in March 2023, which is down 78% from the 1,117 kt the same period last year. At the same time, the South African coal price has experienced a decline of 30% since the beginning of 2023 reaching $129.22/tonne”.

“Regarding Indonesia, the numbers are impressive. The country has shipped 13,361 kt in February 2023, up 96% from 6.783 kt the same period last year. In March, Indonesia shipped 14,830 kt which is 27% higher than the 11,674 kt shipped during the same period last year. The local price benchmark has only lost 6% of its value since the beginning of the year, costing $73.95/tonne versus $90/tonne on the 1st of January 2023”, Mr. Kanatas said.

“Taking a look at the vessels that completed the trip from Australia to China, there was a significant drop in Capesize vessels carrying coal after 2020. In 2021, zero Capes discharged in China and only seven did so in 2022. This year is a different story, as 22 coal-carrying capes have loaded from Australia and will, or has already discharged in China. Comparing these numbers with Capes loaded from Indonesian, we saw 52 and 51 capes discharging in China in 2021 and 2022 respectively. For 2023, only two Capesize vessels carrying coal were fixed to carry coal to China. This convergence in coal-carrying vessels and volumes in both Indonesia and Australia, showcases that smaller vessels are being used to complete such trips. At this moment, the Australian coal price is competitive to the other benchmarks, so it remains to be seen if these levels will lure more Chinese buyers to get back to Australia and buy the higher quality coal”, Intermodal’s analyst concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide