Coal cargoes unwanted in Europe are heading to Asia, where utilities are stockpiling the fuel amid sweltering temperatures heading into the summer.

Shipments of about 7 million tons of Colombian coal will be exported to Asian countries in the next quarter, instead of ports in Europe, according to James Marshall, chief executive officer of Berge Bulk Ltd., whose fleet of ships ply those routes. Destinations for fuel used by power plants and steelmakers include China and India, he said.

European customers raised their imports of Colombian coal in 2022 by 23% to about 30 million tons, according to data from shipbroker BRS Group, after the continent was plunged into an energy crisis following Russia’s invasion of Ukraine. However, with natural gas prices dropping more than 90% since August, more power plants are switching back to the alternative fuel.

More coal is also heading to Asia from South Africa, Carl Tyler, a head of chartering at Noble Resources Group, told a conference in Singapore last week.
 
The extra arrivals in China will add to burgeoning inventories at coastal ports. The country has ramped up imports at the same time as expanding domestic production to feed the reopening of its economy. But demand hasn’t kept up as China’s recovery has disappointed.

That’s likely to change as the weather warms, and alternatives like hydropower are affected by the lingering impact of drought in 2022 and the prospect of hotter-than-usual temperatures this summer.

A stronger economic performance in the second half would bolster China’s power needs, said Johann Tan, an analyst at Fitch Solutions’ unit BMI. “A warmer summer also incentivizes higher coal supplies as insurance against energy shortages,” he said.