Chinese Coal Appetite
Last year, China’s coal imports (both seaborne and inland) surged, continuing 2023’s momentum. In 2024, Chinese customs data recorded a total coal import of an impressive 543 million tons, marking robust year-on-year growth of 14.4%. As imports surpassed an unprecedented 500 million tons, thereby setting a historic record, it appears that this was driven by higher seaborne imports. Indeed, AXSMarine data suggests that seaborne volumes reached 431 million tonnes. This accounts for 31% of all coal carried by sea globally.
In addition, it is noteworthy that global coal seaborne shipments only increased by 1.8% year-on-year, significantly lower than the +12.1% in Chinese imports. Indeed, anemic global growth reflected the relatively lackluster imports into prominent markets such as India, Japan, South Korea and Taiwan. Although China’s economy faced considerable headwinds in 2025, it appears dry shipping had no other reliable coal importer able to buck the global slowing trend of coal appetite. This makes it even more imperative to understand the drivers behind China’s appetite for seaborne coal.
Capesizes: A Growing Role in China’s Coal Imports
According to AXSMarine data, Chinese seaborne coal imports rebounded steadily over the past two years from 2022’s low. The resurgence of Capesize (160-220,000 Dwt) coal shipments was particularly noteworthy. Following the lifting of Australia’s coal import ban in January 2023, Capesize volumes surged by 386%, climbing from a low of 12.2 million tons in 2022 to a remarkable 59.3 million tons in 2024. Panamax (68-85,000 Dwt) shipments also hit new highs, soaring 60% from 2022’s level to a massive 255.8 million tons.
The breakdown of imports by vessel type tells an intriguing story. Panamax ships dominated in 2024, accounting for 59% of total coal shipments into China - a 5% increase from the previous year. Capesizes saw their share increase to 14%, signaling steady growth.
From 2021 to date, China’s list of overseas Capesize coal suppliers had been on a ‘merry-go-round’ motion, with no definite pattern. This signals the volatile geopolitical environment that shipping had to contend with, and for the foreseeable future.
Chinese Capesize coal imports in 2024 were dominated by three countries: Australia, Russia, and Colombia, which collectively accounted for 90% of the total imports. A detailed analysis of the data for each country is as follows:
Australia: Between 2014 and 2020, coal imports from Australia accounted for 80%-90% of Capesize coal shipments to China. However, after the restrictions on Australian coal imports were imposed in October 2020, imports plummeted by 96% to just 1.36 million tons in 2021, andby 2022 imports had fallen to zero. Following the lifting of the ban, Australian coal imports rebounded to 29.67 million tons in 2023, accounting for 58% of Capesize coal imports that year. In 2024, imports increased by another 32.2% year-on-year to 39.2 million tons, raising Australia's share of Chinese Capesize coal imports to 66%.
Against the backdrop of a zero import tariffs free, Australia's thermal coal exports to China have quickly recovered and even surpassed pre-ban levels. However, Australia’s market share in China’s coking coal imports has been eaten into over the past few years by, amongst others, Russia, Mongolia, the United States.
Russia: Russian coal imports via Capesizes declined significantly in 2024, dropping 40% year-on-year from the record high in 2023 to 7.8 million tons, which accounted for approximately 13% of total Capesize coal imports. Russian coal exports have recently faced headwinds, notably logistical and payment challenges. Nonetheless, considering that Russia government's coal export target to China remains at the 100 million tons level (with total seaborne and rail shipments in 2024 expected to slightly exceed 90 million tons), Russia will continue to play a significant role in China's coal import market.
From the chart, we can observe that prior to 2020, as the two main vessel types competing for coal cargoes in the Pacific market, Capesize and Panamax ships exhibited a relatively clear substitutive relationship. When the Capesize-to-Panamax freight rate premium (gold curve) expanded, shipowners often opted to transport coal using Panamax fleets. This was reflected in the chart by a noticeable decline in Capesize's share of coal cargo volumes in the Pacific market (blue curve).
After Australia returned to China's coal procurement list, this negative correlation did not persist, likely due to the shipowners adopted a cautious approach, opting to test the market with smaller cargo volumes and vessels at the initial stage of trade recovery. Looking ahead to next year, as market expectations for Capesize FFA prices continue to be flat-footed for 1H25, this could potentially support increased coal transportation demand for Capesize vessels in the Pacific basin.
Outlook for China’s Coal Import Demand in 2025
Imported coal has consistently offered a significant cost advantage over domestic coal throughout the year, driving increased interest from end-users in procuring imported coal. Compared to 2023, seaborne coal supply continued to improve markedly in 2024, with key coal-exporting countries ramping up shipments to China.
In December 2024 the General Office of the National Development and Reform Commission (NDRC) issued a notice entitled “On Properly Managing the Signing and Performance of Long-Term Thermal Coal Contracts for 2025.” The notice introduced adjustments to long-term thermal coal contract requirements, including a reduction in the mandatory contract signing rate for coal enterprises from 80% to 75%. This policy change allows power plants to reduce the proportion of coal procured under long-term contracts, thereby providing them with more flexibility and choice in coal procurement, whether from imported coal or the domestic spot market.
Although these policy changes have introduced some potential market volatility, the continued rise in domestic coal production inevitably impacts import demand. Against the backdrop of a high import base over the past two years, China's coal import volumes are unlikely to be sustained this year. It is therefore tentatively expected to stabilize at around 500-530 million tons. Of this, 400-420 million tons should be seaborne.
By partially squeezing the Panamax capacity, in 2025, we expect Capesize coal transport demand at 60-65 million tons, with the primary downside risk being a potential decrease in Russian coal exports, which could negatively affect Capesize demand.