Panamax coal freight rates in the first quarter of 2022 were higher year on year as tight coal supply and concern about sanctions against Russian volumes led to changes in trade routes and an increase in tonne-mile demand.

 

In the Pacific, coal trade from eastern Russia to buyers was disrupted. This led to increased demand from further afield, including Indonesia, which entails coal travelling about twice as far to northeast Asia as it would if coming from the Russian far east ports.

 

European buyers also sought to diversify away from Russia amid railing constraints and perceived sanctions-related risks, leading to an increase in very long haul shipments from east Australia to Europe (albeit with most spot fixtures on Capesize ships), as well as more interest in Colombia to Europe trade. Colombian imports into ARA ports rose by 178pc on the year to 656,000t in March.

 

European utilities even enquired about Indonesian coal, although the extent of this continuing depends on whether Indonesia's mining companies have product that fits the specifications needed by European buyers. Indonesian coal sales to Europe accounted for less than 1pc of the country's total exports in 2021.

 

This shift in trade flows helped to support rates in the global Panamax market during the first quarter. Over the quarter as a whole, the Indonesia to south China rate was up by nearly 30pc year on year, despite a lack of trade in January when Indonesia briefly banned coal exports to support supply to local utilities, and continued output constraints linked to heavy rainfall in the key producing region of Kalimantan.