Asia’s seaborne coal markets stumbled in February 2020, Reuters reports. In addition to the coronavirus outbreak in China, the weakness in coal concentrated in other major importers of the polluting fuel.
South Korea’s imports of both thermal and coking coal were particularly hard hit, dropping to 6.9 million tonnes in February from 11.4 million tonnes in January and 9.4 million in February 2019, according to vessel-tracking and port data compiled by Refinitiv. South Korea’s weak coal demand was sparked by the country’s decision to close up to 15 coal-fired power plants between December 2019 and February 2020 in order to limit air pollution over winter.
South Korea, Asia’s fourth-largest economy, has about 60 coal-fired power plants, generating 40 per cent of the country’s electricity, with nuclear holding a 30 per cent share and natural gas around 20 per cent. The bad news for coal exporters is that South Korea will extend the closure of coal-fired plants this month, with the Energy Ministry saying on March 1 that up to 28 plants will be idled this month.
India’s coal imports also slipped in February 2020, with Refinitiv data showing a total of 16.4 million tonnes of both thermal and coking coal arriving, down from 18.2 million in January 2020. India, the world’s second-biggest coal importer behind China, is struggling with softer economic growth, which is curtailing electricity demand growth.
In addition, some coastal power plants that rely on imported coal are struggling to sell electricity at prices high enough to make running the generators financially viable.
Pollution isn’t yet a major reason why India’s coal imports are softer, but it probably should be given the widespread issues with air quality, especially in major cities such as New Delhi and Mumbai.
A warmer-than-usual winter, ongoing economic struggles and low prices for spot liquefied natural gas (LNG) are the most likely reason for Japan’s lower coal imports. Refinitiv data showed the world’s third-largest coal importer brought in 13.3 million tonnes in February, down from January’s 16 million and 13.8 million in February 2019.