Coal trade should see growth return in 2021 following a contraction this year as the coronavirus pandemic slowed manufacturing, while supply lines were shut in. Economic activity is expected to at least start to get back to normal, even if the virus continues to impact daily life, according to consultant Drewry. There will be a “robust” growth in coal trade in 2021, with increases in imports in several countries, mainly in Asia. Even the European Union is forecast to see imports rise to 87m tonnes from 71m tonnes this year, said maritime research analyst Rahul Sharan. Thermal coal imports, for power generation, are projected to rebound by 5% to 991m tonnes, according to Drewry estimates. That compares with a 10% drop this year to 943m tonnes. Coking coal imports, for steel-making, will meanwhile recover by 6% to 275m tonnes, compared to the 14% drop to 259m tonnes envisaged for 2020.

Maritime Strategies International also sees growth of about 9% next year to 1.265bn tonnes, underpinned by a recovery in Indian and European demand, which is at risk from further coronavirus restrictions and government policy shifts. Without this recovery, trade growth would be closer to 3%, the London-based consultancy said. The increased trade flows should support the bulker market, especially panamaxes and capesizes, and to a lesser extent supramaxes.

Torvald Klaveness likewise believes global coal imports “are likely to record quite a positive growth” next year as global economies recover from the black swan event of Covid-19. The company’s head of research Peter Lindstrom noted that coal’s share in the total dry bulk trade mix had dipped to 21% in the first nine months of the year from 24% in 2019, using its deadweight tonne-by-duration metric, which takes into account trade inefficacies. Measured by volume, coal’s share was 27% in 2019 and 25% year to date. Thermal coal was under “heavy pressure” he said in an outlook report, as investors pull out of coal-related companies in “fear of association, whilst local pollution together with global warming, is affecting the public’s and policymakers’ attitude towards coal negatively”. However, rumours about the death of coal have been “greatly exaggerated in our view”, he added.

The sentiment was echoed by BIMCO’s chief shipping analyst Peter Sand who said that “the end of coal will not be anytime soon”. Although peak demand was in 2019, coal has been stable over the last five years and would have seen growth this year had it not been for the pandemic. He does not expect a “massive comeback” next year, but restocking efforts will stimulate trade as the world, excluding China, gets back to normal.

Brokerage Braemar is also a bit more on the bearish side, forecasting growth of just 2% next year, from a contraction of 8% this year. Weaker demand in Europe, India, Japan and South Korea shape this year’s slump, combined with protectionist policies from China, which has seen it ban coal imports from Australia amid a trade brawl. Vietnam is one of the few bright spots, owing to both healthy steel production and growth in coal-fired power generation, Braemar’s dry bulk analyst Nick Ristic said. “But, in the grand scheme of things, it is not enough to buck the global trend. We still see growth into other developing countries such as the Philippines, Bangladesh, and Pakistan, but these forecasted volumes have been trimmed pretty heavily due to the pandemic,” he said, with Bangladesh, for example, scaling back its coal power ambitions.

With the pipeline of new coal-fired power plants slowing over the coming years, and capacity closures in the developed world keeping pace, coal is facing some pressure, according to Klaveness. “However, while we do believe that the net growth in coal fired capacity will slow down — both in percentage terms and absolute terms — we are less confident that we will see negative growth in the coming years,” it said. While developing countries in Asia are adding capacity, as is Turkey, Japan and South Korea should at least be stable given their project pipeline. “Taken together we are quite confident that thermal coal imports outside of China and India will grow in the coming 3-5 years as the growth in Emerging Economies more than offsets the falling imports in developed economies, mainly the EU,” it said, adding that the swing factors will continue to be China and India, that boast vast domestic reserves.

The move away from coal as investors and the public turn to greener energy sources will hurt trade, although renewables will not completely eat into coal’s share as electricity use is forecast to increase by 50% in 20 years’ time, according to BIMCO. Demand for coal in power sectors could drop from 3,854 terawatt hours to 2,990 TWh, equal to a compound annual growth rate decline of 1.3%, which is “no drama” and reflects a gradual change in the making, it said. The International Energy Agency said that renewable power is growing “robustly” around the world this year, contrasting with sharp declines for oil, gas and coal. The Paris-based agency said that new capacity additions, namely wind and solar, in China and the US, will increase output to a record 200 gigawatts this year. The pandemic “has catalysed a structural fall in global coal demand”, it said, adding that its share in the 2040 energy mix is estimated to fall below 20% for the first time since the industrial revolution. About 275 GW of coal-fired capacity is expected to be retired by 2025.