Less frosty ties between Beijing and Canberra could prompt a resumption of Australian coal exports to China, but that could leave Europe in the cold.
Official annual seaborne shipments of Australian coal to China declined to zero in 2022 and 2021, after reaching 70.3 million tonnes in 2020 and a record 92 million tonnes in 2019.
Meanwhile, shipments of Australian coal to northwestern Europe have increased to 9.2 million tonnes in the first half of 2022 from 5.4 million tonnes during the same period last year.
But recent trade talks could lead to China restarting purchases of Australian thermal and metallurgical coal by China, said Pranay Shukla, associate director at S&P Global Market Intelligence.
If so, “it is expected to leave Europe and its allies with tighter coal supplies who are already depending on Australia as an alternative to Russian coal”, he added.
Europe’s ban on Russian coal is scheduled for August onwards and as a result there has been a strong demand for Australian coal in Japan and South Korea.
“That is coupled with an expectation of strong flows into Europe in the second half of 2022, which is expected to continue for a couple of years,” Shukla said.
- George Russell
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