Southeast Asia is expected to increase coal trade

Industry officials expect Southeast Asian countries such as Vietnam and the Philippines to increase their coal consumption and trade this decade, while China, the largest coal consumer, is nearing its peak demand.

Speaking at the Coaltrans Asia Conference, Priyadi, chairman of the Indonesian Coal Miners Association, said the association expects China and India's coal imports to peak in 2025, putting an end to the growth in global maritime trade volumes for this polluting fuel.

ICMA estimates that annual coal imports by Southeast Asian countries, including Vietnam and the Philippines, will increase by an average of nearly 3% annually, from 140.9 million tonnes in 2023 to 170.9 million tonnes in 3023.

At the conference, traders and industry representatives said that the power generation market in Vietnam offers the greatest growth prospects as it is the fastest growing economy in Southeast Asia.

Dinh Quang Trung said he expects Vietnam to export 66 million tonnes of coal by the end of this year, up from 47.8 million tonnes in 2023, according to Kpler.

By 2035, we will have reached our peak in coal imports at 86 million tonnes per year. He said that 70-75% of our total consumption will be electricity.

Data from Kpler shows that Philippines coal imports rose 7.6% in the eight-month period ended August 31. Malaysian coal shipments increased 4%.

Industry officials expect consumption to remain high in major economies, even as Southeast Asian countries are likely to replace China and India. Imports will continue to rise in the short term and then remain stable for the rest of the decade.

Feng Dongbin is vice general manager of Fenwei Digital Information Technology, which operates the Chinese coal analytics platform Sxcoal.

Riya Vyas is a senior analyst at Indian coal trading company I-Energy Natural Resources. She expects coal imports to continue to rise this decade. According to data from Indian consultancy Bigmint, Indian imports were 11% higher than at the end of August.

Industry representatives say that while Southeast Asian countries are not building new coal-fired power plants, they are increasing the use of their existing plants to meet increased electricity demand.

Two officials from state-owned TNB Fuel Services have said data centers are driving the rise in coal-fired power generation in Malaysia. Ember data shows Malaysia is increasingly relying on coal to generate electricity, moving away from natural gas.

After the Philippines, Indonesia is the second largest contributor to increasing fuel consumption in the region.

Patricia Lumbangaol is senior market researcher at Adaro International. She said: “The average age group of Indonesia's installed capacity is relatively young, suggesting that long-term demand will remain robust.”

ICMA's Priyadi said nickel smelters are boosting coal-fired power generation in Indonesia, supplying batteries to battery manufacturers and helping meet demand for electric cars.

Malaysia, the Philippines and Indonesia are among the countries with the lowest renewable energy penetration in Asia (outside the Middle East). They also lag behind major green energy producers such as China and India.

The lack of progress on a plan to reduce financing costs for coal-fired power plants to speed up their early retirement has slowed the seventh-largest coal producer's efforts to reduce its emissions.

Arthur Simatupang, chairman of the Indonesian Independent Power Producers Association, said the government's focus on affordable energy and security had encouraged the use of coal. (Reporting and editing by Kim Coghill; Sudarshan Varadhan)

(Source: Reuters)