Coal vs LNG: the global energy mix is shifting, and dry bulk is watching closely

“As global electricity demand accelerates, energy-hungry nations are reassessing their electricity generation strategies,” BRS Shipbrokers noted in its latest weekly report.

Analysts highlighted that, although nuclear energy is re-emerging as a viable decarbonisation pathway, “LNG is proving a more immediate bridge fuel.”

According to BRS, LNG offtake agreements and memoranda of understanding with US and Canadian exporters have surged in the first half of 2025, underscoring LNG’s growing geopolitical relevance.

Coal remains dominant in China and India

Despite the global momentum toward cleaner fuels, coal maintains a dominant position in China, accounting for 60% of the country’s electricity generation in 2024. BRS noted domestic coal production hit record levels, rising 6% year-on-year in the first five months of 2025.

Amid high inventory levels, Chinese power producers continue to favour cheaper domestic coal. According to AXSMarine data, this preference led to a significant drop in imports: China’s coal imports fell 15% and 33% in Q1 and Q2 2025, respectively, compared with the same periods last year.

Despite LNG spot prices in Asia falling to 11-month lows, China’s LNG demand remained subdued throughout the first half of 2025.

In India, coal’s share is even more pronounced, representing 74% of the power generation mix, while gas accounts for less than 2%. BRS noted India’s energy diversification efforts continue to face major headwinds. “High LNG prices and constrained domestic gas production have rendered gas generation increasingly unviable,” the firm stated.

Although coal imports dropped by 13% year on year in the first half of 2025, the commodity still made up 66% of India’s seaborne dry bulk imports by dwt. BRS explained, “Until domestic pipeline and regasification capacity scales meaningfully – and gas becomes more cost-competitive – coal is likely to remain India’s primary bulker driver in the medium term.”

Europe accelerates LNG adoption

In contrast, Europe has emerged as the leading importer of US LNG, absorbing over 77% of exports during the first five months of 2025. “LNG plays a vital backup role amid intermittent underperformance of wind, solar and hydro sources, while geopolitical alignment with Washington adds further momentum,” BRS said.

Coal, meanwhile, continues its structural decline across the continent. Germany’s coal imports dropped 35% year-on-year in the first half of 2025. In Poland, renewables surpassed coal for the first time in the country’s power mix. BRS attributed this shift in part to tighter environmental regulations, including the EU Emissions Trading System (EU ETS), the Green Deal, and the Fit for 55 package.

This transition has also affected the dry bulk market, as falling coal demand leads to reduced volumes and tonne-mile exposure.

Asia-Pacific: a mixed picture

In south Asia, countries such as Bangladesh are emerging as LNG adopters, while in southeast Asia, Thailand and Vietnam have announced ambitious LNG expansion plans. However, BRS noted long lead times and sluggish policy shifts are slowing the transition away from coal.

In northeast Asia, LNG remains a central pillar in national decarbonisation strategies. At the same time, coal-fired generation is increasingly constrained due to growing scrutiny from the public and investors over environmental concerns. Reflecting this shift, Japan’s seaborne coal imports fell 26% year on year in the first half of 2025, while South Korea’s declined by 30%.

“These trends indicate significant tonne-mile concerns for both Capesize and sub-Capesize segments,” BRS warned.