AsiaElec: Vietnam looks to South Africa, Australia for coal in tight markets

Vietnam is seeking more coal from South Africa and Australia for delivery in April and May as domestic production falls and supplies from Asia tighten amid growing prices.

Global coal markets have been disrupted by Russia’s invasion of Ukraine and volatile prices, meaning that Vietnam has to find new sources of supply.

Vietnamese Trade Minister Nguyen Hong Dien asked the South African Ambassador to Vietnam, Mpetjane Kgaogelo Lekgoro, to connect Vietnam coal companies Vinacomin, Northeast Corp. and EVN with South African suppliers in order to procure coal supplies for April and May, the ministry said in a statement, S&P Global Commodity Insights reported.

Dien spoke with Australian Ambassador to Vietnam Robyn Mudie about increasing delivery in April, the statement also said.

The news comes as the Australian government released a forecast saying that Vietnam’s rising power demand and difficulties in stepping up domestic production would lead to coal imports climbing until 2025, reaching a peak in 2030.

Vietnam did not import any coal from South Africa in 2021, while it imported 15.6mn tonnes from Australia, down 23.15% from 2020, Vietnamese customs showed.

EVN said in March that Vietnam was expected to face a power shortage in April and May because of the fuel shortage in the country, S&P Global Commodity Insights reported March 31.

Vietnam’s search for more coal comes as the Australian government said that global demand for coal was moving away from developed economies towards developing countries in Asia, forcing global markets to adjust.

The Resources and Energy Quarterly report released by Australia's Office of Chief Economist on April 4 said that the coal phase-out in Europe and North America would reduce demand for coal.

"The year 2030 looks to be a significant turning point, representing a coal power phase-out date for many OECD countries, but a peak demand date for a number of nations across Asia," the report said. "The underpinning transition of energy sources across much of the world could lead to significant volatility in coal trade and coal prices in the interim."

Demand would then shift to Asia’s emerging economies, leading to volatile prices and market movements.

"Imports to nations excluding India, China, Japan and South Korea are expected to rise from 221mn tonnes in 2021 to 239mn tonnes in 2027," it said. Imports are anticipated to moderate for Japan, Taiwan and South Korea due to their 'net zero' carbon policy commitments.

Imports to Asia are expected to offset much of the decline – coal use in China is likely to remain strong, with the government recently removing energy intensity goals from its energy targets. However, China also continues to seek ways to reduce its dependency on coal imports, which could come about through expanding domestic production, it said.

Coal demand in India is predicted to rise steadily over the outlook period, rising by 20mn tonnes to 173mn tonnes by 2027, with growth then slowing thereafter amid an anticipated rise in domestic output.

Thailand may begin phase-outs towards 2027, with coal-powered generation expected to fall to 10% by 2030.

Efficiency and price competitiveness in coal-fired generation in Malaysia and planned construction of new plants in the Philippines are anticipated to keep import demand firm.