THERE is little guarantee of any significant lift in demand for the global fleet of panamax bulk carriers, even if China ends a two-year, unofficial ban on Australian coal imports.

Earnings for panamax vessels shipping coal to south China from Indonesia slumped to the lowest since June 2020 this week, at under $8,000 per day, according to the Baltic Exchange.

The average panamax time charter equivalent rate is also at a four-month low, data shows, mirroring a general slump across the global bulk carrier fleet of 12,300 vessels over 10,000 dwt.

Panamax bulk carriers are the biggest suppliers of tonnage for seaborne coal, shipping some 60% of global volumes of nearly 1.2bn tonnes annually.

China stepped up imports from Indonesia and Russia after a trade spat with Australia in 2020 began over the origins of Covid-19. It unofficially banned thermal and metallurgical imports later that year, reshaping global seaborne flows that again altered when Europe banned coal from Russia in mid-2022.

Talks to partially lift the Chinese ban on Australian coal were held this week, according to media reports, with four key state-owned importers, including steel makers, set to resume purchases this year.

“Should China return to the export market more meaningfully, and do so primarily from Australia, then we estimate the impact on total dry bulk market tonne-mile demand at plus 1.2% on an annualised basis,” Omar Nokta, a shipping analyst at Jefferies, said in a research note.

However, trade between the two countries was unlikely to return to pre-ban levels, said London shipbroker Braemar, in a weekly report on the dry bulk sector.

“We expect Chinese domestic producers to sustain the levels of production of last year and continue to drive substitution of seaborne volumes, implying less need for expensive Australian coal,” the report said. “In its most recent release in November, China produced 391.3m tonnes of coal, the second-highest level on record.

“With Covid-19 restrictions being constantly removed, China’s domestic coal supply chain logistics should normalise from those in second half last year, indicating a lower need for quickly sourced seaborne product. While the reopening in China will increase the country’s energy demand, we expect the strong domestic output and less logistical disruptions to keep seaborne demand subdued.”

Australia supplied China with 57% of the 216m tonnes of seaborne thermal and metallurgical coal it imported 2020, but less than 0.5% in 2022, according to figures compiled by London-based analytics and commodities tracker DBX Commodities.

“The overturning of the ban would lead to Australian metallurgical coal finding its way back into China at similar volumes to previous years,” said DBX Commodities analyst Alexandre Claude. “For thermal coal, the picture is looking different as lifting the ban should have a muted impact as Indonesian and Russian prices are cheaper than Australian on a China delivered basis.”

Australia has found new coal markets in Europe and Asia, further limiting any positive impact on tonne-miles, according to Oslo-based Arctic Securities’ daily report. Tonne-miles measure volumes carried by distance travelled and are a proxy for demand.

“A potential lifting of the ban would likely not have a major impact on total demand,” the note said.

The Baltic Dry Index, a composite of rates across the bulk carrier segment, declined by 16 points on January 6 to 1,130, the lowest since last September.