Coal may become the third commodity to surpass annual shipments by sea of 1 billion metric tons, joining crude oil and iron ore, as India raises imports of the solid fuel to feed new power plants.
Seaborne coal trade will expand 4 percent to 956 million tons this year as Indian purchases gain 12 percent and imports into China climb 8 percent, according to data from Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. Deliveries may exceed 1 billion tons if Chinese power plants buy extra, cheaper foreign thermal coal, according to Calum Kennedy, a senior analyst with Clarkson in London.
“Before, the iron-ore market was driving shipping markets,” said Ole Henry Senne, chief commercial officer of Singapore-based SIVA Bulk Ltd., whose vessels transport Indonesian coal to India. “Now it’s India and China with their coal needs. If you took away the coal from India and the coal imported to China, there probably wouldn’t be a market.”
SIVA Bulk is a unit of Chennai, India-based SIVA Group. Its annual Indian coal shipments came to 7.5 million tons in 2011, up fivefold in two years, and accounted for 150 voyages, Senne said by phone Jan. 31. China is the biggest global coal consumer, and Indonesia is the largest exporter of the variety burned to generate electricity.
Indian imports of coal burned for power will have this year’s second-strongest growth among all the 3.7 billion tons of global dry-bulk commodities shipped by sea, according to Clarkson. The shipbroker projects a 17 percent increase to 104.2 million tons as Indian buying of coal used to make steel falls 3.4 percent. The fastest-growing trade is U.S. iron-ore imports, predicted to jump 33 percent to 1.6 million tons.
Crude shipments by sea topped 2 billion tons in 2010, and iron-ore transportation surpassed a billion tons for the first time that year, Clarkson data show. Seaborne trade in coal exceeded 1 billion tons last year, according to Simpson, Spence & Young Ltd., the second-largest shipbroker, which predicts further expansion in 2012.
India relies on coal to meet 54 percent of its energy needs, according to Nigel Bell, who books vessels to carry the fuel to the country as managing director of Petersfield, England-based shipbroker Bell Shipping. Total Indian demand will top 645 million tons in the year through June, Bell said, citing research prepared for his company by London-based Drewry Shipping Consultants Ltd.
The South Asian nation planned as of January 2010 to have 52 coal-fired power stations, of which 42 were to rely solely on imported fuel, Bell said.
Coal-carrying vessels made 2,184 port calls in India in 2010, according to Drewry. Paradip on the eastern coast accounted for the most, followed by Vizag and Haldia.
China would need to add 44 million tons of cargo to raise global coal trade to 1 billion tons from Clarkson’s current forecast. That equates to about four months’ imports.
Buying Australian coal and transporting it to China is now profitable for traders, according to data compiled by Bloomberg. Cargoes shipped to Beilun and Qingdao cost about $12 a ton less than domestic prices, data show. Australia is the largest shipper of steelmaking coal and also leads in terms of total deliveries of the raw material.
Power coal will trade between $110 and $120 a ton this year on average, Morgan Stanley forecasts. The benchmark Chinese price for the fuel with an energy value of 5,500 kilocalories a kilogram (2.2 pounds) was unchanged as of Feb. 5 in a range of 775 yuan ($122) to 785 yuan a ton after three months of declines, figures released yesterday by the China Coal Transport and Distribution Association showed.