Coal: European Imports Look Set To Increase
With the meeting between the foreign ministers of Ukraine and Russia in the Turkish city of Antalya failing to make any material progress towards ending hostilities, the pressure on European energy supplies will continue to intensify.
The continuation of the war is likely to see additional disruptions to the flow of energy from the east to the European markets due to an increasing number of sanctions and possibly retaliatory export bans. As a result, European utilities are looking to reduce their dependence on imports from Russia rapidly.
In a trend reversal, European thermal coal imports began to rise late last year, after a long period of decline, as the global energy crunch started to affect the continent and Russian deliveries of natural gas disappointed. However, following the Russian invasion of its neighbour, the debate over the continent’s reliance on the country’s exports has intensified. The European Commission is drawing up plans for cutting imports of Russian natural gas by up to 80 per cent. With global supplies of natural gas remaining tight, it may prove challenging to find alternative sources for Europe. Hence, coal, long seen to be in terminal decline as an energy source, has seen a reversal of its fortunes in Europe.
Shipfix’s data confirm this development, with cargo orders for coal discharging in European ports increasing sharply last week and reaching the highest reading in our records. So far this week, the data is also pointing towards continued robust order volumes. The increasing quantities of seaborne thermal coal due to arrive may not be enough to solve the energy problems Europe is facing but will buy some valuable time for alternative measures to be put in place.
The number of orders has not seen quite the same spike as the data for volumes, suggesting that there is a shift towards larger vessels and longer voyages in the European coal trade.