Coal shipments to developed countries are expected to fall 2% to their lowest level in 23 years
“AWe estimate coal shipments to advanced economies will fall 2% y/y in 2025, reaching a 23-year low. This decline will be the third annual decline in a row although the rate of decline has slowed compared to previous years. “This contraction was mainly driven by weakening demand for coking coal due to reduced steel production,” said Filipe Gouveia, Manager of Shipping Analysis at BIMCO.
Between January and October, global steel production fell 2.1% y/y according to the World Steel Association. Developed countries dependent on coking coal imports showed marked weakness with production declines of 3.4% y/y in the EU, 4.1% y/y in Japan, and 3.6% y/y in South Korea. As a result, coking coal shipments to developed countries fell 10% y/y.
Between 2022 and 2024, thermal coal shipments to these countries fell by 30%, but surprisingly, the number has increased by 1% y/y in 2025, driven by increased shipments to the EU earlier this year. Electricity demand is increasing in Germany and the Netherlands, while electricity generation from wind and hydropower is decreasing. Shipments to Japan and Korea remained steady as higher electricity demand from AI data centers and semiconductor manufacturing offset growth in electricity generation from renewable sources.
“Developed countries are expected to be the destination of 29% of coal shipments in 2025, a sharp decline from 77% 23 years ago. Despite this, developed countries still represent around 7% of global dry bulk cargo. As a result, the decline in shipments this year is expected to have a negative impact on the market, especially the panamax and capesize segments,” said Gouveia.
So far in 2025, 57% of that cargo has been transported by Panamax vessels and another 30% by capesize vessels. Price competition from the Panamax segment appears to be increasing, increasing cargo share by three percentage points compared to 2024.
Next year, demand for coking coal imports in developed countries may recover, especially in Europe. The World Steel Association estimates European steel demand will increase 3% due to increased infrastructure and defense spending. This could support steel production in Europe, especially if the EU raises steel tariffs and cuts tariff-free import quotas. However, in the medium term we expect coking coal demand to grow more slowly than steel production. Production of recycled steel is expected to increase gradually, and the process does not require coking coal.
“Demand for thermal coal imports is expected to continue to decline in the coming years, negatively impacting ship demand. Between 2025 and 2030, renewable energy capacity is expected to grow by 64% in Europe, 30% in Japan and 49% in South Korea, according to the International Energy Agency,” Gouveia said.
Source: BIMCO
