Peak Coal Demand in Sight for China?

China’s voracious appetite for coal appears to be nearly sated if an analysis by industry membership body BIMCO is correct. 

Filipe Gouveia, an analyst at BIMCO points to an interesting change in energy generation and China’s primary energy mix. During the period from January to April 2024, China’s electricity generation from renewables increased 12%. This significantly outpaced the growth in electricity generation from fossil fuels of only 6%. 

This is further reinforced by the fact that coal shipments to China fell during this period by 7% year-on-year. 

Gouveia further adds that so far in 2024, ‘electricity generated from renewables in China accounted for 25% of the country’s electricity production. That is a record for this time of year when renewables are typically weaker’. 

This falls in line with a broader trend that has seen China steadily build up its renewable generation capacity. In fact - as per Gouveia - compared to 2019, China has more than doubled electricity generation from wind and tripled generation from solar - due in large to investments in capacity additions.

So, the question in this context is - how will this affect shipping? 

According to BIMCO, it will be panamax and supramax ships that will be most affected by a peak in Chinese coal demand. Coal accounts for 14% and 9% of all cargoes carried by these vessel types respectively. 

It’s a situation which could become more pronounced should the International Energy Agency be correct. The international body has predicted that China will account for almost 60% of the world’s new renewable energy capacity by 2028. 

Should this situation come to pass it would not only be enough capacity to cover China’s forward growth in energy demand, but would be sufficient capacity to replace much electricity generation from coal. 

As Gouveia concludes his analysis: 

“The medium-term outlook for coal shipments rests in the Chinese government’s hands. To successfully continue to shift towards renewable energy, they must increase investment in China’s electricity grid and improve energy storage. If these investments are successful, we may soon see peak steam coal demand in China and a gradual decline in shipments”.

Cargo consultancy services

Whilst peak coal demand may be on the horizon for China, the country still imports vast quantities of coal (in 2023, the country imported 474.42 million tons of coal). Thus, the world’s bulk cargo transporters won’t be short of work anytime soon.

Yet shipping coal cargoes is not without its challenges. 

If you’re engaged in the shipping of coal, then you need the support and advice of Brookes Bell’s cargo scientists. Our cargo scientists can give swift, practical advice and assistance during all stages of the transportation process (or provide exceptional surveying and analysis services should you encounter an issue with your cargo). 

Explore Brookes Bell’s coal cargo consultancy services

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