Dry Bulk Tonnage Anchored at Major Chinese Ports
Post Panamax vessels carrying coal from Australia to China have borne the brunt of the delays in receiving customs clearance for on board cargoes over the past few months. Though this issue has received more press coverage of late, tonnage with Australian coal on board has in fact been sitting off Chinese ports since June. The reduction of what now numbers around 40 Panamax/Post Panamax has undoubtedly had some impact on Pacific tonnage supply in this sector and is probably a factor, together with strong grain exports ex Canadian West Coast/US North Pacific and increasing coal enquiry ex Indonesia for a recent bounce in the Panamax Pacific Round Voyage rates; P3A (Pacific Round Voyage) on The Baltic Panamax Index(BPI 82) rising from $9,580 on 9th November to $12,569 on Friday’s close.
The 6.5mt of coal currently being held (mainly in the Northern Chinese ports) represents only a fraction of Australian exports to China, which to the end of October totalled 77.5mt (+0.5mt yoy) though 43mt of this figure was shipped in the first four months of the year. In fact, Australian is one of the few countries not to have suffered reduced exports to China this year as total seaborne trade excluding Australia at 152mt is down 20mt yoy to October.
In the three months since August there has been an overall sharp reduction in world coal exports to China; just 53mt in total compared to 89mt in the corresponding three-month period in 2019. In part this might be due to the record imports in the first half of the year(174mt) such that importers have been running well ahead of their annual quota(c300mt). One reason for such concentrated imports in first half 2020 was the disruption to domestic coastal coal movement at the height of the pandemic in China (January to April); In these 4 months only 203mt was carried by Chinese flag tonnage mainly from the north to the south of China compared to 255mt in the comparable period last year. Since then coastal coal trade has recovered strongly such that by the end of October it stood at 610mt only now down 6 per cent yoy.
Clearly Australian coal is not favoured by China at present (a mere 2.5mt was shipped from there to China in October) and this coincides with an active shipment programme instead out of Indonesia(boosting the sub cape market in South East Asia) amid rumours that the Chinese government China may extend the coal import quota this year to 310-320mt. Additionally China has recently signed a three-year US$1.46 billion deal with the Indonesian Coal Mining Association (APBI) to buy increased quantities from Indonesia from 2021 which may mean less reliance on Australian thermal coal in future.
Meantime should a solution be found to enable the current tonnage sitting off China with Australian coal to be discharged, significant numbers of additional Post Panamax’s, in particular, may end up coming back on the spot market. (Howe Robison Research)