Thermal vs coking coal
| Type | Use |
|---|---|
| Thermal coal | Power generation — burned directly in coal-fired power stations |
| Coking (metallurgical) coal | Steelmaking — converted to coke as a reducing agent in blast furnaces |
The two trades have different demand drivers — thermal coal tracks power-sector demand and increasingly competes with gas and renewables, while coking coal tracks global steel production, particularly in China and India — and this distinction matters more to freight forecasting than the tonnage figures suggest, since the two trades can move in opposite directions.
Main export and import flows
- Australia and Indonesia are the dominant exporters, split between thermal (Indonesia-heavy) and a mix including significant coking coal (Australia).
- Asia — China, India, Japan, South Korea and increasingly Southeast Asia — is the dominant import region.
- Smaller but persistent Atlantic-basin flows exist from the US, Colombia, South Africa and Russia into both Asia and Europe.
How coal freight is chartered
Coal moves overwhelmingly on Capesize (for Australia-Asia long-haul volume) and Panamax/Kamsarmax (for a wider range of origins and destinations, including most Atlantic-basin flows). Fixtures are typically voyage charters, and freight is quoted per tonne on specific benchmark or near-benchmark routes tracked by the Baltic Exchange.
Coal demand is genuinely two-sided in the current market: thermal coal faces structural pressure from decarbonisation policy in many importing regions, while coking coal demand remains tied more directly to industrial and construction activity, particularly steel output.
Frequently asked questions
What is the difference between thermal and coking coal?
Thermal coal is burned for power generation. Coking (metallurgical) coal is processed into coke and used as a reducing agent in blast-furnace steelmaking. The two serve entirely different end markets and their demand can move independently.
What vessel size dominates the coal trade?
Capesize dominates the largest long-haul flows, particularly Australia to Asia, while Panamax and Kamsarmax carry a wider range of coal cargoes across more origins and destinations, including most Atlantic-basin trade.
Is coal shipping demand declining?
Thermal coal faces structural pressure in many markets from decarbonisation policy and competition from gas and renewables. Coking coal demand is tied more closely to steel production and industrial activity rather than energy policy specifically.