Coal inefficiencies firm Capesizes: Golden Ocean

A "structural change" in trade patterns around coal has emerged following the conflict in Ukraine as Capesize activity increases on less efficient, far-flung trade routes compared with the much closer, traditional Russian supply sources, according to shipowner Golden Ocean.

"There's a scramble right now for coal," said Golden Ocean's chief executive Ulrik Andersen. "We have seen coal cargoes from Australia going into Europe, which really tells a story about how inefficient this is."

Increased Capesize activity on the Australian coal backhaul route to Europe was observed only a few weeks after the start of the conflict, despite the EU's ban on Russian coal not coming into effect until mid-August. But for practical purposes, Russian coal has been "banned" by many already, according to Andersen.

"There is a structural change in the trade patterns around coal because we expect most countries to try and out-phase energy and commodities in general from Russia," Anderson said. "For the next few months and perhaps also until the end of the year into next year, we expect coal to contribute to the ton mile quite heavily for Capesize vessels."

Meanwhile, as seasonal rains wind down in Brazil, iron ore exports are increasing and helping to clear excess Capesize tonnage, contributing to the pressure exerted on rates by shifts in coal allocation, according to Andersen.

Capesize $/day charter rates for fronthaul voyages from the Atlantic basin hit $53,200/d yesterday, while round-voyage Pacific basin rates hit $39,479/d, the highest levels since December 2021.

By Ross Griffith