China’s Restrictions on Coal Imports to Affect Demand for Panamaxes
Wmn..Demand for Panamax bulk carriers is expected to shrink due to China’s decision to restrict its coal imports in 2019 below 2018 levels, according to Drewry.
However, an ongoing tussle with Australia could be the silver lining, the shipping consultancy believes.
The Chinese government plans to curb the country’s coal imports by 3-4% in 2019, translating into a decline of about 10 million tons.
Indonesia, Australia, Russia and Mongolia are the major coal suppliers, which together accounted for more than 95% of imports in 2018. Mongolian trade is over land, but the dip in trade from other key locations will be detrimental for Panamaxes. Assuming no change in the sourcing pie in 2019, annual seaborne trade could decline by 8.6 million tonnes rendering more than 10 Panamaxes unemployed, Drewry said.
At the same time, changes are expected in trade patterns because of ongoing political differences between China and Australia, resulting in delayed customs clearance of the latter’s coal cargoes.
“Although the Dalian custom authority – which handles around 14 million tonnes of annual coal imports – has stopped giving clearance to coal imports from Australia, we believe this matter will soon be settled,” Drewry further said.
In 2019, Australia coal exports to China are expected to be in the region of 71-72 million tons, compared with 89 million tons in 2018.
In turn, any decline in coal imports from Australia is expected to be partly offset by overland imports from Mongolia.
“If Mongolian exports to return to peak of 36-37 million tonnes, this will leave China with a deficit of 12-13 million tonnes, which it could result in increase in trade with North and South America,” the consultancy added.
As the voyage distance between China and North America is almost three times that of Australia to China, increased coal imports from latter will more than offset the loss in vessel employment, deploying about 15 additional bulkers compared with 2018, reports World Maritime News.
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