Fewer long-haul coal shipments to Asia hurt capesize bulkers, Braemar says

Long-haul shipments of coal to Asia have declined in the past two months, much to the detriment of the capesize bulker market, according to Braemar.

Capesizes shipped 46% of Vietnam’s coal imports so far this year, but Indonesia overtook Australia in May as Vietnam’s top supplier of the commodity, a report on Tuesday by the UK-based broker showed.

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Though the percentage tripled from 15% in the first half of 2020 to the expense of geared bulkers, the fact that Vietnam got most of its coal from Indonesia in May still hurt the capesize sector because Indonesia is much closer than Australia.

“This development has blunted the tonne-mile effect,” Braemar said in its report.

Long-haul coal shipments from the US to Asia have also fallen over the past two months to a four-month low in May, causing an additional negative impact on tonne miles for capesizes, the broker said.

“Earlier this year, we commented that a mild winter in North America plus higher natural gas consumption created an exportable surplus of US coal, which subsequently priced into India and other Asian markets,” Braemar noted.

US coal imports to Asia have declined to slightly more than 1m tonnes in June from a high of about 2.5m tonnes in March, a graph by Braemar showed.

The capesize market has fallen steadily since early May, though mostly due to lower demand for iron ore from China.

The Baltic Exchange’s Capesize 5TC basket of spot-rate averages across five key routes almost reached $22,000 per day in early May but then fell below $10,000 per day as June arrived.

It has stayed above $12,000 per day since after the first week in June and rose 3.2% on Tuesday to reach nearly $12,800 per day.