At the Geneva Dry conference held in Geneva, Switzerland last month, the common view among industry representatives was that the increasing tensions in the Strait of Hormuz have revitalized the coal trade transported by sea. Shipowners, analysts, and operators argued that concerns over energy security have brought coal back to the center of the global agenda.

During a session moderated by Benjamin Wilkes, COO of D’Amico Dry, discussions were held on the coal market, energy security, geopolitical risks, and the future of the global energy transition.

Wilkes stated, 'Coal has proven to be incredibly resilient. It is said to be ending continuously, but it keeps coming back every time.'

The panel emphasized that the rising instability in the Middle East poses risks to natural gas supply, prompting countries to revert to thermal coal.

Burak Çetinok, head of research at Arrow research company, noted that the outlook for coal trade transported by sea at the beginning of 2025 is quite weak. He mentioned that global coal volumes have declined by approximately 4%, which corresponds to a loss of about 60 million tons. He also recorded that due to short-distance trading models, ton-mile shipments have dropped by about 10%.

However, Çetinok pointed out that the outlook is changing rapidly with the escalation of tensions around Hormuz, stating, 'We are currently experiencing an energy crisis. Demand for coal is rising again, and I believe this is just the beginning.'

According to Arrow's forecasts, the current crisis could create an additional demand for coal of between 55 to 65 million tons in the global market. It is estimated that this increase could draw approximately 100 capesize vessels from the spot market.

Stamatis Tsantanis, Chairman and CEO of Seanergy Maritime, stated that about 40% of his fleet is still used for coal transportation.

'We have not yet seen the end of coal,' Tsantanis said, noting that they are observing strong demand, particularly on long-distance routes from Australia to the Far East, Colombia to the Far East, and Australia to Europe.

Industry representatives speaking on the panel expressed that the discussion in energy markets is now shaped not only around 'decarbonization' but also around 'energy resilience.'

Nicos Rescos, Operations Director of Star Bulk Carriers, stated that governments are increasingly focusing on energy supply security and strategic reserves.

Rescos said, 'The narrative is changing. Previously, only focusing on decarbonization, now environmental groups are realizing the importance of energy security.'

It was noted that Europe, Japan, and South Korea are reassessing the lifespan of their coal plants, while China is emphasized as the country best prepared for current crises.

William Fairclough, CEO of Wah Kwong Maritime Transport Holdings, stated that China has learned significant lessons from the 2021 energy crisis and has focused on strengthening coal security in recent years.

Fairclough expressed, 'Decarbonization remains a long-term strategy, but today energy security has become the top priority.'

Panelists noted that despite China continuing its renewable energy investments, approximately 60% of electricity generation still comes from coal, and coal serves as a critical backup capacity, especially during peak demand.

The potential for renewable energy sources to bring more volatility to the load markets was also among the discussed topics. Çetinok mentioned that production fluctuations due to weather conditions could lead to sudden increases in coal demand in the future.

'When renewable sources cannot meet the increase in demand, the first alternative to kick in will be coal,' he said.

It was noted that India is rapidly increasing its coal-based energy capacity, while Indonesia's export quotas and restrictions have created new uncertainties in the global market.

Fairclough stated that if global demand continues to rise, Indonesia may have to ease its export restrictions.

One of the strongest messages from the panel was that the supply of vessels in the dry bulk market will remain limited.

Tsanthanis pointed out that approximately 1,100 dry bulk vessels will reach 20 years of age within the next three years, while the new shipbuilding capacity in Chinese shipyards is largely filled until 2030.

'The main issue in the market is the supply of vessels,' Tsantanis said, expressing that the current conditions are supportive for dry bulk shipowners.

Even companies that are hesitant to publicly advocate for the importance of coal acknowledged that this commodity is at the center of trade. Fairclough stated that about 60% of Wah Kwong's kamsarmax fleet operations are related to coal trade.

'People don’t like to talk about this, but coal is still one of the cornerstones of the market,' he assessed.

The Geneva Dry conference, one of the leading events in commodity transportation, will be held again in Geneva on April 27-28 next year.

Source: SeaNews Türkiye