Global coal trade patterns have confounded analysts in the past two years and are set to continue their turbulent evolution in 2023, according to the International Energy Agency (IEA). The agency’s Coal 2022 report estimates that demand grew by 1.2% last year. While its projection remains that coal use will peak this year and decline from 2025, the global energy crisis could cause major spikes or contractions before then.

Seaborne coal trade, representing 23% of global dry bulk cargo volumes, declined by 0.9% in 2022 due to both high prices worldwide and lower imports to China, caused by port closures and growing domestic supply. Surging natural gas prices reversed declining import demand in Europe in 2021, while in 2022 the EU ban on importing Russian coal rerouted exports to Asian countries. High prices encouraged small producers including Tanzania and Botswana to enter the export market for the first time.

Keisuke Sadamori, IEA Director of Energy Markets and Security, said: “Coal demand will likely reach an all-time high this year, pushing up global emissions. At the same time, there are many signs that today’s crisis is accelerating the deployment of renewables, energy efficiency and heat pumps – and this will moderate coal demand in the coming years.”

Looking further ahead, IEA anticipates two dynamics to shape global coal trade to 2025. Europe will return to its phase-out path once the current energy crisis is over, while China and India will increase domestic production and reduce imports. The result will be that trade in coal used for heating and power (currently representing 77% of coal imports) will reduce by 10%. Trade in coal used to produce metals will continue to grow, with volumes increasing by around 6% by 2025.

High prices in coal have been a boon for tanker operators, with the surge in coal and gas prices creating substitute demand for an estimated one million barrels of oil a day extra.