Southeast Asia is becoming more reliant on coal imports, especially as China and India decrease their demand. Countries like Vietnam and the Philippines are expected to increase their coal trade and consumption in the coming years, despite global efforts to switch to renewable energy, according to Breakwave Advisors.
Increased Demand
While demand from top consumer China is projected to approach its peak, Southeast Asia is seen as the new frontier for coal growth. Power generation in Vietnam, in particular, stands out as the most promising growth market. With Vietnam being the fastest-growing economy in Southeast Asia, its reliance on coal to fuel its rapid industrialization and urbanization is expected to rise. The Philippines, similarly, is ramping up its coal imports to meet the increasing energy demands of its population and economic expansion.
As shown in the graphs above, the quarterly quantity of coal tons sent from all origin countries to Vietnam and the Philippines has recorded significant growth during the 2023-2024 period compared to the volumes in 2021-2022. This trend indicates a notable shift in regional coal consumption patterns, driven by both the expanding energy needs of these developing economies and the relative affordability of coal compared to alternative energy sources.
Southeast Asia’s growing demand for coal has broader implications for global energy markets. With China and India scaling down their coal consumption in favour of cleaner energy sources, coal suppliers will increasingly turn to Southeast Asia to maintain trade volumes.
Dry Bulk
The dry bulk freight market has displayed mixed sentiment in the second week of October, with a softening trend observed in the Capesize Brazil–North China route, while signs of an upward trend are emerging in the Panamax Continent–Far East route.
- Capesize vessel freight rates for shipments from Brazil to North China settled at $26 per ton, reflecting a 6% decline week-over-week.
- Panamax vessel freight rates from the Continent to the Far East remained around $37 per ton, defying expectations of a downward trend from the previous week.
- Supramax vessel freight rates on the Indo-ECI route remain around $11 per ton, reflecting an 8% increase compared to the previous month.
- Handysize freight rates for the NOPAC Far East route have remained steady at $35 per ton since April, marking a 15% increase compared to the same period last year.
Downward Trend In Ballasters
The second week of October is characterized by a steady downward trend in the number of blasters across all vessel size categories, except the Handysize NOPAC market. Meanwhile, the Capesize market in Southeast Africa has shown consistent signs of increase.
- Capesize SE Africa: The number of vessels has surpassed 100, now just 7 vessels below the annual average.
- Panamax SE Africa: The current number of vessels has remained steady at approximately 95, marking one of the lowest levels recorded since the beginning of the year and holding at the low point observed at the end of the previous week.
- Supramax SE Asia: The number of ballast ships declined further to below 95 vessels, continuing the downward trend that began at the end of week 40.
- Handysize NOPAC: The number of ballasters surged to its highest level of the year at 97, which is 17 above the annual trend.
Dry Tonne Outlook
In the second week of October, the outlook for dry tonne-days shows a decreasing trend for the Capesize segment, while signs of upward revisions are emerging in the Panamax and Supramax vessel segments.
- Capesize: A slower pace of growth has been observed following the increase from week 35 to the end of week 39. However, the current level remains significantly higher than the low recorded in week 33.
- Panamax: Weekly percentage growth has continued to rise since the end of week 37, approaching the peak levels last seen at the end of week 27.
- Supramax: Although the growth rate peaked before the end of September, it has maintained a similar momentum into the second week of October.
- Handysize: The Handysize vessel segment has continued its downward trend for October, with the latest peak recorded at the end of week 31.
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Source: Breakwave Advisors
