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Asia’s seaborne imports of metallurgical coal fell to their lowest level in three years

Asia’s seaborne imports of metallurgical coal fell to their lowest level in three years in February, signaling a decline in freight demand for bulk carriers. The primary reasons behind this slump are lower steel production in China and India combined with government interventions in raw material imports. India’s government-imposed quotas on coke imports and increasing steel imports from South Korea and China have reduced domestic steel output, leading to a drop in coking coal demand. Although these restrictions may be temporary they have already curtailed the demand for bulk carriers transporting coking coal, affecting freight rates in the region. Similarly, China’s metallurgical coal imports fell to an 18-month low, with overland imports from Mongolia increasing and reducing reliance on seaborne shipments. Adding further complexity, China imposed a 15% tariff on U.S. coking coal imports, effectively ending its reliance on American supply. As China shifts to alternative suppliers like Australia and Canada, trade flow adjustments are likely to increase demand for certain shipping routes while reducing activity on U.S.-China coal trade routes. The recent U.S. 25% tariffs on steel and aluminum imports have led the UAE's aluminum exports to the U.S. surging in early March before the tariffs took effect, shipping volumes spiked temporarily, but a long-term slowdown in aluminum shipments is expected as tariffs dampen demand. Canada, the largest supplier of steel and aluminum to the U.S., has retaliated with 25% tariffs on U.S. metals and other goods,.

The International Energy Agency (IEA) has warned that new U.S. tariffs could weaken global oil demand in 2025, adding to the uncertainty in the shipping industry. Global oil supply is expected to exceed demand by 600,000 barrels per day, leading to lower crude oil shipments and potential freight rate declines. Additionally, high-profile U.S. tariffs on China, Canada, and Mexico could contribute to a macroeconomic slowdown, reducing industrial activity and thereby limiting demand for oil transport. Conversely, OPEC+ plans to unwind voluntary production cuts, which could increase crude shipments, but compliance remains uncertain. Kazakhstan’s ramp-up of its Tengiz oil field production has boosted global oil supply, yet Venezuela’s production forecast has been cut due to Chevron’s license loss, which could tighten availability and affect shipping routes from South America.

Despite oil price volatility, lower oil prices could benefit the shipping industry by reducing fuel costs for vessels. However, this potential advantage may be offset by lower transport demand, meaning freight companies must balance cost efficiency with volume reductions in the coming months. The convergence of these trade disruptions and economic pressures presents both challenges and opportunities for the shipping industry. Bulk carriers transporting metallurgical coal are likely to see demand fluctuations, with Indian and Chinese policies determining whether imports recover. Container shipping may experience uncertainty as U.S. tariffs force companies to reconfigure supply chains, impacting port congestion, transit times, and trade volume. Oil tanker freight rates may face downward pressure, unless OPEC+ production policies lead to higher shipping demand. Alternative trade routes may develop, creating opportunities for carriers in emerging markets as companies shift sourcing strategies.

S&P Activity:

Dry:

On the Cape Sector, the “Maran Odyssey” - 172K/2006 Daewoo and the “Maran Sailor” - 172K/2006 Daewoo were sold for USD 19 mills each to clients of GMS. Chinese buyers acquired the Supramax “Port Macau” - 59K/2008 Tsuneishi Zhoushan for high USD 11 mills, while the Scrubber fitted “Strange Attractor” - 56K/2006 Mitsui found new owners for mid/high USD 9 mills. On the Handysize sector, the “Fortune Hero” - 35K/2012 Huludao Bohai changed hands for USD 8.5 mills, while the “Tate J”- 34K/2012 SPP was sold for high USD 13 mills.

Tanker:

VLCC was very active this week with 4 vessels finding new owners, with an average age of 21 years old. The VLCC “Wafrah” - 318K/2007 Hyundai Samho was sold for USD 40 mills. Moreover, the VLCC “New Naxos”- 300K/2003 Universal found new owners for region/mid USD 33 mills. On the LR2 sector, Chinese buyers acquired the “Southport” - 115K/2008 STX for USD 35 mills. On the Mr2 Sector, the “Challenge Procyon” - 46K/2011 Shin Kurushima changed hands for high USD 19 mills, while the 3-year older “Centennial Matsuyama” - 47K/2008 Onomichi was sold for mid USD 16 mills. The MR1 “Yash” - 37K/2002 STX was sold for USD 8.2 mills. Finally, the Small tanker “TTC Vishaka”- 18K/2012 Zhejiang Hangchang found new owners for USD 13.1 mills.

Xclusiv Shipbrokers Inc.