Colombia was by far Europe’s largest thermal coal supplier in 2023, providing just under 14m tonnes of a total 42m tonnes of imports, according to Kpler estimates.
But this was down from 14.5m tonnes in 2022 and total European imports last year from all origins were 42% lower on the year at 41.5m tonnes.
Further declines are expected as the region takes steps to phase out the fuel, while Turkey –another key destination for Colombian coal – has rapidly increased its imports of lower cost Russian coal, since an EU-wide ban on Russian supplies in 2022 due to the war in Ukraine.
As such, the owners of key Colombian producers Cerrejon and Drummond had signed deals for the option to sell as much as 8-10m tonnes/year, combined, with Chinese utilities, several market sources said.
“The situation in Europe is not improving for coal and it’s hard [for Colombia] to compete with Russia into Turkey, with the discounts for Russian coal,” said an analyst, formerly employed with a Colombian coal exporter.
According to Kpler estimates, Turkey’s imports of Russian coal surged from around 5m tonnes in 2021 to 18m tonnes last year, while Colombian supply dropped from 13m tonnes to 6m tonnes.
Alexis Ellender, lead major dry bulk analyst at Kpler, said the deals with Chinese buyers equated to as many as 10 capesize (over 110,000 deadweight tonnes) cargoes per month, with prices apparently linked to the API 8 index – which reflects the price of coal for delivery in South China.
“This is a logical move by the seller, as the outlook for thermal coal in the Atlantic is very weak,” he said, adding “there is no sign of significant demand returning in Europe any time soon and they are competing with Russian coal in the Turkish market”.
In the past, Colombian cargoes to Asian destinations had been more “opportunist”, as the high freight costs meant exporters struggled to compete with Pacific-basin supplies from Australia and Indonesia, he said.
But there were already reports of two cargoes from the Glencore-owned Cerrejon coal mining complex booked for shipment to China in February, he said, adding “it will be interesting to see how many more are confirmed”.
Spokesmen for Glencore and Cerrejon declined to comment.