Southeast Asia is expected to increase coal trade as China nears its peak

Industry officials predict that Southeast Asian countries like Vietnam and Philippines will boost coal consumption and trade in this decade even as China, the top coal consumer, is approaching its peak demand.

In a speech at the Coaltrans Asia Conference, Priyadi, the Chairman of the Indonesian Coal Miners Association, said that the Association expects China and India's coal imports to reach a peak in 2025. This will end the growth in the global seaborne trade volume for the polluting fuel.

The ICMA estimates that the annual coal imports of Southeast Asian countries, including Vietnam and Philippines, will grow by nearly 3% per year on average, to 170.9 millions metric tons in 3023, up from 140.9million tons in 2023.

The conference heard traders and industry officials say that the power generation market in Vietnam is the most promising for growth, as it is the fastest-growing economy in Southeast Asia.

Dinh Quang Trung said that he expects Vietnam to export 66 million tonnes of coal by the end this year. According to Kpler, this compares to 47.8 millions tons in 2023.

By 2035, we will have reached our peak coal imports of 86 millions tons per year. He said that electricity will account for 70-75% our total consumption.

Kpler data shows that the Philippines' coal imports grew 7.6% in the eight-month period ending Aug. 31. Malaysian coal shipments increased 4%.

Industry officials expect that consumption will remain high in the large economies, even though southeast Asian countries are likely to replace China and India. Imports will continue to increase in the short-term and then remain steady throughout the remainder of the decade.

Feng Dongbin is vice-general manager of Fenwei Digital Information Technology. This company operates the Chinese coal analytics platform Sxcoal.

Riya Vyas is a senior analyst with the Indian coal trading company I-Energy Natural Resources. She expects that coal imports will continue to increase in this decade. According to data from the Indian consultancy Bigmint, Indian imports were 11% higher than they were at the end of August.

Industry officials claim that while southeast Asian countries do not add new coal-fired power plants, they are increasing the use of their existing power plants in order to meet higher electricity demands.

Two officials of the state-run TNB Fuel Services have said that data centres in Malaysia are driving growth in coal-fired electricity use. Ember data shows that Malaysia is increasingly relying on coal to generate electricity, at the expense natural gas.

Indonesia is the second largest contributor to the increasing use of fuel in the region, after the Philippines.

Patricia Lumbangaol is a senior market researcher at Adaro International. She said: "The average Indonesian installed capacity age group is relatively young, which suggests that the long-term need will remain robust."

Priyadi, from ICMA, said that nickel smelters are increasing coal-fired electricity generation in Indonesia. They are supplying batteries to battery manufacturers, and are helping meet the demand for electric cars.

Malaysia, Philippines, and Indonesia are among the countries with the lowest penetration of renewable energy in Asia, outside the Middle Rast. They also lag behind large green energy producers like China and India.

Lack of progress in a plan to reduce the cost of financing coal-fired plants to accelerate their early retirement has slowed down efforts to cut emissions by the seventh largest coal-fired producer.

Arthur Simatupang is the chairman of the Independent Power Producers Association of Indonesia. He said that the government's focus on energy affordability and security has encouraged the use of coal. (Reporting and editing by Kim Coghill; Sudarshan Varadhan)

(source: Reuters)