A recent shift in the South Korean thermal coal market has seen Russia and Indonesia gain significant market share from Australia, which has long been the dominant supplier. This trend is driven primarily by port congestion and weather disruptions in Australia, combined with the competitive pricing of Russian and Indonesian coal.
Market Share Shift in August
In August, Russia and Indonesia collectively supplied nearly two-thirds of South Korea’s coal imports, effectively displacing Australia from its leading position. Russia shipped 3.76 million mt, a 54.6% increase year-over-year. Indonesia shipped 3.74 million mt, a 50.1% increase year-over-year. Australia supplied 2.70 million mt, a decrease of 3.76% year-over-year and 26.76% month-over-month.
Contributing Factors to the Shift
- Australian Port Congestion: Vessel delays at key Australian coal ports, particularly in Newcastle, have been a major factor. This congestion has been exacerbated by weather events, such as heavy rains and cyclones, which have disrupted rail lines and loading operations. This has led to inconsistent and delayed deliveries, causing South Korean utilities to seek more reliable suppliers.
- Price Competitiveness: The price advantage of Russian and Indonesian coal has made them highly attractive to South Korean buyers. In August, the average landed price for Russian coal was $89.03/mt, while Indonesian coal was even lower at $68.95/mt. This contrasts sharply with the average price of Australian coal, which was significantly higher at $129.9/mt.
Future Outlook
Market analysts and traders expect this trend to continue as long as Australian port bottlenecks and weather disruptions persist. The competitive pricing of Russian coal, coupled with its premium quality (low sulfur content), and the close proximity of Indonesian supply, gives these two nations a strong position to maintain their increased share of the South Korean market.
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Source: S&P Global
