Global coal flows experienced significant shifts in 2022, driven by sanctions imposed on Russia after it invaded Ukraine. Russian supplies could not all be redirected due to railway constraints, contributing to a tightening of global supplies. Other producers, in particular Australia, faced severe production disruptions due to adverse weather conditions (La Niña). Infrastructure issues hindered South Africa from fully capitalizing on higher prices. In response to elevated prices, China and India limited imports and significantly pushed domestic production. Despite this, India's imports increased due to strong demand. International trade of thermal coal grew by 2% to 1 045 Mt. Trade of metallurgical coal experienced a slight decline, driven by weaker economic performance, amounting to 307 Mt (-0.4%).

Thermal coal exports from Russia dipped approximately 10% to 157 Mt, while metallurgical coal exports fell by 14% to 35 Mt. Australian thermal coal exports fell by about 7% to 184 Mt, whilst exports of metallurgical coal decreased by 3% to 166 Mt. The United States, which had previously served as a swing supplier, witnessed a 2.8% decrease in thermal coal exports to 35 Mt despite high prices, due to shortages of rail slots and to the poor perspectives for the sector dissuading financing and investment. Metallurgical coal exports remained stable. Colombian exports of thermal coal decreased by 4% to 52 Mt, in part due to unfavourable weather conditions.

The missing supplies were only partially offset by other producers. Indonesia, the largest exporter of thermal coal, proved to be also the most flexible with exports of thermal coal growing by 9% to 469 Mt. Mongolia ramped up exports of metallurgical coal by 54% to 17 Mt, despite Covid-related restrictions. Attracted by high prices, smaller suppliers such as Mozambique, Botswana and Tanzania increased exports, although volumes were marginal. Collectively, thermal coal exports from countries other than Indonesia, Australia, South Africa, Colombia, Russia and the United States grew by 16% to 79 Mt in 2022. However, this increase is expected to be short-lived, as prices need to remain high to overcome their poor logistics and high break-even points. 

Despite no new large-scale projects coming online, high prices in 2022 have left coal mining companies with stronger balance sheets, providing them with an opportunity to invest in sustaining as well as some expansionary capex. This, together with the end of La Niña, which hampered production in Australia, has strengthened the coal supply outlook for 2023 despite coal prices retreating from their highs.

Stronger coal supply and lower gas prices sent coal prices steeply downward towards the end of 2022. The drops attracted price-sensitive buyers such as China and India, although the price declines were partially offset by the depreciation of the Chinese yuan renminbi and the Indian rupee against the US dollar. China and India ramped up imports at the beginning of 2023, with China even ending its unofficial ban on coal from Australia. Until April, imports from China and India amounted to approximately 50% of global coal imports, as the two largest coal producers and consumers are also the largest importers.

During the first half of 2023, the European Union temporarily turned into an exporter of thermal coal due to ample inventories accumulated during the previous year and reduced coal-fired power generation. In April, EU countries exported close to 1 Mt. Export destinations included, among others, Morocco, India, and China.

However, elevated global demand for thermal coal imports is projected to be predominantly covered by Indonesian exports, expected to rise by 12% to about 525 Mt for the full year. Similarly, the elevated demand for metallurgical coal is anticipated to be mainly covered by additional exports from Mongolia, more than doubling to well over 40 Mt. Total exports of thermal coal are expected to increase to 1 099 Mt (+5.2%), while metallurgical coal exports are forecast to reach 340 Mt (+11%) in 2023, with total coal trade expected to approach the record volumes seen in 2019. For seaborne coal trade, we project around 1 335 Mt (about 93% of total coal trade) which would surpass the 1 331 Mt record reached in 2019.