China coal imports surge despite restrictive measures

sxcoal.com Thermal Coal 2020-05-12 13:19:17


China's coal imports have been rising sharply this year on a yearly basis, indicating little effect from restrictive measures taken by the government to curb imports of the fossil fuel.


In April, China posted a year-on-year increase of 22.3% in coal (lignite included) imports to 30.95 million tonnes, raising the January-April volumes to 126.73 million tonnes, a strong rise of 26.9% year on year, showed customs data.


The surprisingly high imports indicated that the government's measures to curb imports were actually not as strict as expected, and the fundamental reason would be attractive prices of seaborne cargoes.


Early this year market talks said the National Development and Reform Commission, the country's top planner, required this year's coal imports to keep roughly steady with the annual level during 2017-18.


But the reality seems going opposite, with imports mushrooming by 33.1% during January-February, 28.4% during January-March and 26.9% over January-April this year.


China imports nearly 300 million tonnes coal a year. Despite accounting for just less than 10% of China's total demand, imported coal has huge impact on China's coastal market. About 75% of coal imports flow to southern coastal consumption areas.


In recent years, the share of imported coal has been picking up, since domestic supply started to shrink from 2016 when supply-side structural reform was launched while demand was on the rise.


China's coal imports ascended 46% from 204.15 million tonnes in 2015 to 299.67 million tonnes in 2019, which was 6.3% higher on the year, a faster growth compared with 4% rise in raw coal output to 3.97 billion tonnes last year.


The influx of imported coal has both advantages and disadvantages.


Advantages

Large arrivals of imported coal, together with long-term contract coal, help stabilize China's domestic spot thermal coal market, as southern utilities scale down buy of spot coal.


Abundant supply of imported material is also conducive to easing tightness in rail transport and port storage capacity. Or else, downstream demand will be quite hard to be met even though all rail arteries including Mengji, Shuohuang and Daqin run at full tilt.


A ramp-up in imported coal will also help bring down China's domestic spot prices, and subsequently lead to lower cost for power plants, leaving leeway for cut in power tariff.


Disadvantages

China's spot thermal coal prices may hover low if flooding of imported coal causes oversupply in domestic market. This will resultantly impact performance and profit of mining, rail, port and shipping firms, and partly offset the results achieved during the supply-side structural reform.


Import policies

China adopted a bunch of flexible import policies to regulate domestic market to stabilize supply and prices.


These measures include requirement of coal quality, adjusting import tariff, adjusting customs clearance time, and suspending discharge of imported coal at some ports. The latter two measures are mostly used, and have been imposed since February, yet the effect is not that noticeable.


Thus authorities further tightened grips on coal imports in April, according to market sources contacted by sxcoal.com.


Discharge of imported coal was banned at some northern ports. Non-local buyers were prohibited from declaring customs at a few other northern ports, while local users still need longer clearance time of up to 45 days.


Though there is not official notice on banning of clearance, Guangzhou and Fuzhou ports in South China have used 80% of their annual import quotas, implying stricter control on imports in the remaining months this year.


It also needs 45 days to clear customs at Guangzhou and Fuzhou, and unloading of imported coal should be reported to customs authorities in advance.


Owing to these measures, China's coal imports are likely to drop notably. That would help coal miners, over 40% of whom are in loss, out of the mire. Yet whether this could happen is still uncertain, considering tepid demand in global market and comparative advantage of imported coal.



(Writing by Jessie Jia  Editing by Harry Huo)
For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.

Share this article
Connect with us

Editors Recommendations

1 Australian thermal coal offers jump amid Chinese purchases 2020-09-18

Australian thermal coal offer prices continued with a rapid increase on the back of increased purchases from Chinese buyers. High-ash 5,500 Kcal/kg NAR thermal coal for November and Decem

2 Wait-and-see sentiment prevails in China's thermal coal market 2020-09-18

Chinese thermal coal market participants intended not to take positions temporarily amid lack of clarity on import quotas and guidance that may come from a meeting summoned by the nation's top economi

3 China met coal extends strength, but upside may be capped 2020-09-18

China's metallurgical coal market extended strength at major production bases late this week, and prices of multiple coal grades are likely to climb higher or hold steady in the near term.

4 Weekly global coal market news summary (Sep 14-Sep 18) 2020-09-18

China, Mongolia to build three more cross-border rail lines The governments of China and Mongolia will work to build three more cross-border rail lines, in an effort to expand Mongolia's expo

5 Weekly China coal market news summary (Sep 14-Sep 18) 2020-09-18

China's Aug raw coal production rises 2.48% on mth China produced 325.81 million tonnes of raw coal in August, growing 2.48% from in July, showed the latest data from the National Bure...

6 China Coal Daily Track (Sep 18) 2020-09-18

Thermal coal Production area All preparation plants in Yuyang district, Yulin, Shaanxi province was temporarily shut down and banned to buy coal yesterday. The time when their operation cou

7 China to subsidize newly-added biomass power plants, totaling 1.5 bln yuan 2020-09-18

China issued an action plan to subsidize newly-commissioned biomass power plants in order to boost development of the renewable sector and reduce emissions. The central government will ap

8 Shaanxi's Yuyang orders halt at all coal washing plants for inspection 2020-09-18

Authorities in Yuyang district of Shaanxi province ordered all the local coal washing plants to stop receiving coal while taking back all the coal quotas in the noon of September 17 until passing insp

9 India Q2 thermal coal imports slump 41.5% on yr 2020-09-18

India's thermal coal imports in the second quarter declined 41.5% from the same period a year earlier, as power demand was heavily hit during the COVID-19 epidemic. Some participants predicted India's

10 Bullish sentiment persists in seaborne thermal coal market 2020-09-17

After a flurry of trades this week, sentiment kept bullish in the Chinese seaborne import thermal coal market, stoking prices to further highs. Australian high-ash 5,500 Kcal/kg NAR therm

Most Read Articles

1 Chinese traders ramp up Aussie met coal purchase 2020-09-15

Some Chinese traders were seen ramping up restocking of Australian premium metallurgical coal lately on expectations that China, sourcing over half of seaborne met coal from Australia, may loosen its

2 China's spot thermal coal offers strong on pre-holiday restocking 2020-09-15

Offer prices of Chinese spot thermal coal remained quite strong at northern ports, supported by wide expectation of massive restocking activity by end users before China's 8-day National Day holiday s

3 Australian thermal coal prices climb on emerging demand 2020-09-14

Chinese seaborne thermal coal market saw a notable rally in Australian high-ash thermal coal cargoes on the back of fresh demand, sources said on September 14. Selling interest of 5,500 K

4 Concerns arise in China's thermal coal market after price rise slows 2020-09-14

Concerns over a retreat arose in China's spot thermal coal market, following slowed price growth as trades weakened late last week. There has been a visible standoff between coal buyers a

5 Chinese thermal coal prices go beyond "green zone" again 2020-09-15

China's spot thermal coal prices have been increasing for more than a week, with the benchmark 5,500 Kcal/kg NAR grade already breaking through the upper limit of the "green zone". As of

6 China's Aug raw coal production rises 2.48% on mth 2020-09-15

China produced 325.81 million tonnes of raw coal in August, growing 2.48% from in July, showed the latest data from the National Bureau of Statistics (NBS) on September 15. The August raw

7 Mongolian coking coal regains favor amid short supply in China 2020-09-14

Mongolian coking coal is regaining favor from its largest buyer China, as some Chinese end users turned to imported cargoes amid regional short supply and increased building activity. Sou

8 China's premium coking coal further ticks up on active buys 2020-09-16

China's premium coking coal market continued to pick up in the middle of this week, as coke producers scrambled to restock the raw material to raise coke production on bullish outlook. Of

9 North Queensland Aug coal exports rebound from 1-1/2 yr low 2020-09-14

Coal exports from three terminals of North Queensland in Australia were back above 10 million tonnes in August after hitting the 18-month low in July, showed the latest data from North Queensland Bulk

10 Indonesian thermal coal prices range bound amid tepid trade 2020-09-15

Indonesian thermal coal prices have been largely unchanged this week, as trading activities are still scarce, sources said. Supramax 3,800 Kcal/kg NAR thermal coal was mainly offered abov