Letter 520, January 2026

The coal trade is facing two major forces, energy security & decarbonisation that are driving structural changes in seaborne trade patterns in the short- and long- term. At the same time, Asia is experiencing huge industrial expansion while navigating an increasingly volatile geopolitical environment, which formulates 90% of seaborne coal trade.

This highlights the growing importance of Carbon Capture Technology, and feasibility of infrastructure capacity needs as we move from an era of volume to one of clean quality & efficiency that is now unfolding. 

The prospects of coal demand over the next five years hinge on the above factors, the impact of market dynamics on the commercial cost of coal within 2-tiers (dirty v clean), and finally the trade arbitrage between coal and gas. This Letter examines these factors that are instrumental in determining the speed of decarbonisation, and lead to convergence in a new equilibrium.