Coal cargoes unwanted in Europe are heading to Asia, where utility companies stockpiling the fuel amid sweltering temperatures heading into the summer.
The company's chief executive officer, James Marshall, said in a statement that shipments of about 7 million tons of Colombian coal would be exported to Asia in the next quarter, instead of ships in Europe. It is possible that China and India are the destinations for fuel used by power plants and steelmakers.
European customers raised their imports of Colombian coal last year by 23% to about 30 million tons, according to data from shipbroker BRS Group, after the continent was plunged into an energy crisis following Russia's invasion of Ukraine. With gas prices falling more than 90% since August, more power plants are switching to the alternative fuel.
More coal is also heading to Asia from South Africa, Carl Tyler, a head of chartering at Noble Resources Group, told a conference in Singapore last week.
The new arrivals in China will add to burgeoning inventories at coastal port terminals. The nation has increased imports while expanding domestic production to support the reopening of its economy. As China's recovery has disappointed, demand hasn t kept up.
As the temperature warms, alternatives like hydropower are impacted by the lingering effects of drought last year and the possibility of hotter-than-normal temperatures this summer.
A stronger economic performance in the second half would bolster China's power needs, said Johann Tan, an analyst at Fitch Solutions unit BMI. A warm summer also incentivizes higher coal supplies as an insurance against energy shortages, he said.
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