Chinese coal imports jumped 7% last year to 300m tonnes as international prices for the fuel plunged to levels too attractive to resist, despite government intentions to keep foreign purchases flat.
The world’s biggest coal consumer managed to squeak its total imports in under an unofficial import goal thanks to a plunge in December volumes to just 2.8m tonnes, comprehensive customs data showed on Thursday, confirming preliminary estimates from last week.
December’s imports were down from nearly 21m tonnes in November and 73% lower than the same month last year.
“We think that likely understates the true [2019] increase in China’s imports,” said Commonwealth Bank commodities analyst Vivek Dhar in a note. “We suspect that cargo timings were deliberately delayed, particularly in December, so as to count towards the 2020 coal import quota.”
Chinese customs restrictions are mainly aimed at manipulating domestic coal prices into a range that supports the country’s miners without raising energy costs excessively, analysts say.
The Asia Pacific basin’s benchmark Newcastle coal index fell roughly 36% last year to around USD 65/t by the end of 2019. By contrast, benchmark prices on the Zengzhou exchange averaged closer to USD 85/t last year.
Slowing growth?
Dhar expected a slowdown in Chinese coal-fired power growth to outpace a slowdown in domestic coal production over the next two years. This in turn was likely to increase the risk of surplus supplies and weigh on the country’s import appetite.
“China accounts for [approximately] 20% of the world’s thermal coal imports, so a fall in China’s thermal coal import demand will weigh on seaborne thermal coal prices.”
Daniel Hynes at ANZ bank expected a softer year for Chinese imports.
“There are certainly domestic issues that are weighing on demand for imports this year,” said Hynes. “Domestic production is lifting, but overall demand growth is clearly slowing, so we are getting a compound effect.”
Lloyd Hain at AME Research in Sydney said China was likely to seek to limit 2020 imports to 300m tonnes.
“We expect this year to peg at 2019 [levels] – it will be the target until it isn’t.”
https://www.hellenicshippingnews.com/china-imports-300m-tonnes-of-coal-in-2019-as-prices-tumble/