The Dry Bulk Weekly Review in Shipfix Data
A minor rebound in cargo order volumes during the past week could indicate that Indian utilities are preparing for higher coal imports in the coming months as the country looks to safeguard electricity supplies. Shipfix’s forward-looking data sets also suggest that rising Indian coal demand could be satisfied by shipments from Russia. Such a development could fuel demand for long-distance transportation from the Baltic Sea.
A Limited Recovery in Cargo Order Volumes for Coal Bound for India Could Signal Rising Demand
At the end of the week before last, Indian authorities instructed the country’s power plants using imported coal to remain in operation until the middle of October. In addition, they asked operators having under-utilised gas-fuelled plants to increase their output during the coming months. The move came as the world’s most populous country recorded an eight per cent increase in electricity demand during the financial year that ended last month. Demand is also expected to rise in the coming months as rising temperatures will fuel increasing electricity consumption. Hence, in order to avoid extensive blackouts, the Indian government wants to see greater production. The development can be expected to fuel greater imports of coal and other energy commodities.
While trade flow data suggested that Indian coal imports rose during March compared to January and February, Shipfix’s forward-looking cargo order data indicate that last month’s month-on-month increase may extend into the current month. However, a decline in demand for seaborne transportation of coal for discharge in Indian ports during March points towards weaker import volumes in May.
Weekly cargo order volumes for coal discharging in India have shown some volatility over the past few weeks. After a rebound during the month’s first week, the week before last exhibited significant weakness. However, last week showed early promise, and the total for the week rose by nearly ten per cent. Also, should the country’s utilities heed the government’s request, it is likely that demand will accelerate in the coming weeks. Such a development would primarily benefit the supramaxes and the panamaxes, which are typically the vessels of choice in the Indian coal trade.
Rebound in Indian Appetite for Russian Coal
Unlike many other countries, India has not imposed sanctions on imports from Russia. As a result, the sizeable Indian market has become increasingly important for Russia’s commodity exporters. A likely rise in demand for coal among India’s power producers as they respond to the government’s request to keep power plants running until mid-October will likely translate into increasing shipments of Russian coal to India.
After trending lower over the past two months, the past two weeks have seen a sharp rebound in cargo ordering activities for Russian coal bound for India. The week before last saw aggregate volumes of nearly 700,000 tonnes, the highest level since early September. The past week delivered another solid reading, marginally below the previous weekly total. A rise in demand for seaborne transportation of coal from Russia’s terminals in the Baltic Sea has been chiefly responsible for the recent surge. The panamaxes have been the primary beneficiaries of this development, with most of the cargoes for the long voyage from the Baltic Sea to India being handled by the segment.
Indian and Turkish Buyers Fuelling Higher Cargo Order Volumes for Russian Coal Loading in the Baltic Sea
Russian coal exports from its terminals in the Baltic Sea have experienced both headwinds and volatility since sanctions put an end to access to European Markets. Still, a likely increase in Indian demand could see a rise in volumes shipped from the ports in the Baltic Sea.
The past two weeks have seen a significant increase in cargo ordering activities for Russian coal loading in the Baltic Sea region. While, as previously mentioned, part of the surge has been for shipments to India, there has also been an increase in demand for cargoes bound for Türkiye. After a weekly average during the first three months of the year of around 360,000 tonnes, the past two weeks have seen the total topping one million tonnes.
The recent surge in weekly cargo has chiefly benefitted the panamaxes, with the demand situation in the other segments broadly unchanged. Given the often lengthy voyages in the coal trade from the Baltic Sea, the recent developments have added to the tonne-mile demand in the panamax segment.
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