The seas are alive with coal. Shipping lines have been crisscrossing the oceans with so much coal lately that major ports in the Netherlands, Belgium, and others are having to commandeer iron storage space just to accommodate the influx. Once again the Russian invasion of Ukraine is upending traditional trade. What is now known as the “wartime coal trade” is following a similar trajectory as the “wartime oil trade.”

In 2019 CNN famously reported that China would stop funding overseas coal projects. Headlines of “Coal is Dying” were commonplace. The activist group 350.org piled on with tweets such as, “Coal is dead. Power to the people!” Fast forward to the present and China’s coal production over the first half of this year rose by 10%. Not only is China producing coal, but it’s also a major buyer. The Chinese government has already approved multi-billions in new mining investments at home, and India and Indonesia are following.

In Europe, Germany, of all places, is creating a new coal reserve, and France is rumored to be restarting one of its main coal-fired plants in the upcoming months. The Ukrainian invasion has much of Europe spooked with Romania, the Czech Republic, Greece, Poland, the UK, and Italy all delaying the closures of their coal-fired plants. The shipbroker BRS revealed some telling data out of Europe – in 2021 the continent bought 44 million tons from major coal producers like the US, Australia, Colombia, South Africa, and Indonesia. At the end of June 2022, nearly 41 million tons had already been purchased. The US leads the way in terms of supply (14 million tons) with Australia close behind (13 million tons). 

Data from Kpler, a provider of intelligence solutions for commodity markets, report a 6% bump so far for US exports of thermal and metallurgical coal compared to 2021. India purchased a record 2.7 million tons of coal from Russia in June alone.

One of the leading expert advisors in shipping investment, chartering, and risk management, Braemar, posits that Russia’s move towards sales to China and India will alter the demand for the various bulker size categories. For example, smaller Handysizes (35,000 deadweight ton capacity) accounted for 8.8% of total coal volume shipments in the first half of 2022. This was up from 2021, and of these, nearly half (49%) of the Handysize coal loadings were in Russia with destinations to the EU and Japan.

The big unknown, however, remains China. The Asian giant is going through an economic contraction so future demand is tough to predict. Chinese steel production typically propels the demand for coal. According to WorldSteel data, Chinese steel production is already down 3.4% versus 2021.