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COMMODITY RADAR | Spotlight: COAL
Divergence in the coal market offers opportunities
Global seaborne coal flows mask a sharp divergence between thermal and metallurgical coal markets. Thermal coal volumes declined as weaker European and U.S. demand offset resilient Asian imports, while met coal flows surged on stronger demand from China and Japan. Looking ahead, seasonal power demand and Q3 steel procurement should keep coal trade and associated tonne-miles elevated through August.
Global seaborne coal flows increased by 1.0% y/y to reach 116.5 mt in July 2026.
Global seaborne thermal coal flows fell 2.3% to 87.3 mt in July 2026.
Global seaborne met coal jumped 11.8% to reach 27.2 mt in July 2026.
China remains the top destination for thermal coal, accounting for 32% of market share in July 2026.
India remains the top destination for met coal, accounting for just under 20% of market share in July 2026.
Global seaborne coal flows were 116.5 mt in July 2026, up 1% y/y, a small change overall, yet the underlying data below the headline figure points to the two main coal types performing very differently.
Thermal coal flows declined by over 2% to 87.3 million tonnes, while metallurgical coal rose nearly 12% to 27.2 million tonnes. Notably, Asian thermal coal imports remained robust through July, with the top four importers (China, India, Japan, and South Korea) experiencing an 18.3% year-over-year increase. These regions continue to use coal to stabilise grid infrastructure during the typically high power demand summer months, when domestic and industrial cooling is ramped up.
Therefore, the drag on the global demand for seaborne bulk thermal coal flows has come from other regions, mostly Europe and the U.S. These regions have shifted to using a greater proportion of renewables in the energy mix, firstly, and secondly are preferring to run down domestic coal stockpiles rather than enter the market.
Met coal flows in July surged despite India, the largest met coal importer, seeing a decline of 18% y/y. The increase was driven by flows to Japan and China, which saw y/y increases of 24% and 30% respectively. The reasons for increased flows are slightly different, with Japan’s steel sector expected to have begun to turn a corner and China looking to replace volumes that domestic coal mining is missing.
Source: Met coal flows vs thermal coal flows from Signal Ocean https://app.signalocean.com/dry/dynamic/drybulkflows
Looking ahead, Signal Ocean data shows that August met coal flows typically increase m/m, as many steel mills open their Q3 procurement budgets. Given met coal flows are currently running close to 6% higher than the same period last year, it is expected that flows in August 2026 will be above that of the same month last year. This is despite weak global steel production, which WSA has currently 0.7% behind the same period last year.
The outlook for thermal coal is similarly positive, particularly with regard to demand from the big four importers. China, Japan and South Korea are experiencing heatwaves, leading to a rising demand for power for cooling. The heat and drought in India have led to much lower hydropower output and more reliance on coal-fired power. This is unlikely to reverse in the very near term.
The knock-on effects for shipping are that tonne-miles of coal-carrying vessels are likely to remain above 2025 levels and may peak above 2023, for the first time this year.
Source: Tonne-miles of coal-carrying vessels from Signal Ocean https://app.signalocean.com/dry/dynamic/timeseries_dry
Diverging Coal Markets Support Shipping Demand
While headline seaborne coal volumes continue to show only modest growth, the divergence between thermal and metallurgical coal is becoming increasingly important for both commodity and freight markets. Thermal coal demand is being sustained by weather-driven power generation across Asia, even as Europe and the U.S. continue their structural decline in coal consumption. At the same time, stronger metallurgical coal imports into China and Japan are offsetting weaker Indian demand, highlighting shifting regional dynamics rather than a broad-based recovery in steel markets. Looking ahead, seasonal procurement by steel mills, continued summer power demand, and tighter domestic coal availability in key markets should keep seaborne trade well supported. As a result, coal-carrying tonne-miles are likely to remain above 2025 levels, providing a constructive backdrop for Panamax and Capesize freight demand through the remainder of the quarter
Luke has over 8-years of experience analysing and forecasting commodity markets, with particular expertise in stainless steel raw materials and the wider metals markets.
Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
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Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
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