The Chinese government’s aim of suppressing coal and lignite imports in November and December 2018 is adversely affecting demand for Panamaxes and as a result, rates. Yet, according to Drewry, imports will be supported by winter and high-energy demand in the first quarter of 2019.
Namely, the Chinese government is allowing only limited imports in the fourth quarter of 2018, so that total coal imports in the year do not surpass those of 2017. Approximately 42 million tonnes of coal and lignite can be imported in the last quarter of 2018.
As Rahul Sharan stated, in order to control imports, Chinese authorities are increasing port restrictions, which are delaying custom clearance. The more stringent regulation on coal imports, the more negative impact on vessel demand. This results to about 148 vessels being deployed, losing 41 vessels over those employed in fourth-quarter 2017.
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The resultant drop in coal imports to China is detrimental for the employment of Panamaxes, and consequently the dry bulk freight market. The decreased demand on Panamax vessels, consequently affects the freight market as well.
Moreover, according to Drewry, because of weak imports, employment opportunities will be decreased on the Indonesia-China and Australia-China routes, as 97% of Chinese imports are sourced from Indonesia and Australia, while the remaining are from Canada, the US and Colombia.
Finally, during the first three quarters of 2018, China’s coal imports rose due to increasing demand for power generation. Up to September, the country’s seaborne imports of coal and lignite reached 169 million tonnes; an increase of 7.6% over the same period of 2017.
