While gas has been the preferred option for many nations seeking to transition out of coal-fired power, the delay of LNG plants coming on-stream because of the pandemic and higher prices are making coal an attractive option to fill the shortfall.
A good case in point is the rapidly growing Vietnamese economy, which has been turning to LNG as its major power feedstock.
The South East Asian nation has had its ambitious LNG fired power plant rollout strategy stymied by the pandemic.
There is a significant shortfall in supply that only coal is best suited to replace because Vietnam already has installed coal-fired power infrastructure.
Leading Australian coal suppliers such as Whitehaven Coal have recognised the changing market dynamic in South East Asia and are seeking to capture some of the market opportunity and benefit from the rising prices of coal brought about the pandemic and by the Chinese embargo on Australian coal.
Whitehaven Coal said in its latest quarterly report that strong Asian seaborne thermal coal demand resulted in gC NEWC coal prices rising 166% between August 2020 and the last week of June 2021.
"There are no signs of demand weakening, natural gas prices are high and a strong summer demand period is forecast for northern Asia," it said.
"Tendering from Asia-based customers was very active across the quarter with the most noteworthy buyer being Taiwanese electricity generator, Taipower, who came to the market for 45 panamax vessels [3.6 million tonnes] for May to August delivery."
Whitehaven said China continued to supplement its domestic thermal coal production with Indonesian, Russian and South African coal imports, placing further upward pressure on the gC NEWC index.
"All thermal coal supply remains tight in the September quarter, as reflected across all price indices," it said.
Whitehaven is keen to promote its coal as being in line with lowering emissions, claiming it delivers among the lowest carbon emissions per tonne of coal consumed in the seaborne trade.
As Hogsback has noted in a previous column, Australian coal exporters have been effectively frozen out of the burgeoning Chinese market while players such as the US and Russia dive in.
The Australian coal industry must be nimble and seek out pockets of opportunity in the rest of Asia where it has a comparative advantage because of the high quality of its coal product to ensure it captures further COVID-19-created market opportunities.
