After a decade of low prices and declining investments in the coal industry, supply has tightened exacerbated by labour shortages, heavy rains, and limited access to heavy machinery which further constrained miners’ efforts to increase or even maintain exports.

This fundamental imbalance led thermal coal prices to soar beyond the previous record per ton of $192.50 set in 2008, hitting a stratospheric $254/ton in October. After falling back in November/December prices are now back at a record $261 as demand for coal has boomed with for instance Europe resuming significant coal imports which even at these high levels remain well below equivalent gas prices.

Lack of international supply has seen the world’s largest importer of coal, China, ramp up domestic production which was up around 5% y-o-y at over 4 BMT whilst Chinese coastal coal shipments are up a staggering 89 MMT +12% y-o-y in 2021 at 839 MMT.

The second largest importer, India, was largely unwilling to face these high coal prices when they were back at similar levels towards the end of Q3 2021 leading to dangerously low power station coal stocks and temporary blackouts.

Thus, a combination of tight supply and high prices may limit coal’s positive impact on dry bulk trade in 2022.