China’s coal production stood at 3,690 mnt in January-October 2022, showing an increase of 10% y-o-y, whereas total coal imports by China fell by 10% to 244.82 mnt during the period, as per customs data.
Imports fall as domestic production rises
Out of total coal imports, China imported 38.7 mnt of thermal coal during January-October, recording a fall 42% y-o-y. This has come in line with increased domestic coal production.
Coal production in China touched record-highs this year at 4,048 mnt during January-October. Coal production capacity expanded by more than 62 mnt during the year.
China’s coal production surged this year as the government sought to improve energy security by reducing dependence on imports and amassing inventories at power plants, although the country’s coal-power generation rose only by 1% during the period compared with last year.
The highest quantity of thermal coal imported was from Russia followed by Indonesia.
China imported 51.65 mnt of coking coal during January-October, up by 31% y-o-y. This was majorly because of cheaper availability of Russian coal.
Sanctions on Russia by compelled Russia to look for alternative options to sell its coal at cheaper rates. India and China emerged as the key importers of Russian coal post sanctions.
During January-October this year, China imported 17.24 mnt of coking coal from Russia, up 100% y-o-y.
China’s coal price trends
China’s domestic coking coal prices rose by RMB 50-100/t over last week. Prices are assessed at RMB 1,850/t, up 5% w-o-w. Prices strengthened amid logistical issues with delivery of coal due to more stringent Covid-19 restrictions. The major steel mills in China are also facing low inventory due to delay in delivery from the merchant cokeries.
On the other hand, thermal coal prices moved downward to RMB 293/t m-o-m in November. This has come amid bearish industrial sentiments due to Covid-19 flare-ups resulting in reduced energy demand. This, coupled with the government’s cap on domestic thermal coal prices, restricted any rise in prices.
“Thermal coal prices are currently assessed between RMB 1,200-1,300/t ($168-$182/t), and if prices slide below RMB 800/t ($112/t) it will motivate power plants to stock up coal further”, a China-based source said.
Outlook
Amid the current stringent Covid19 restriction policies and cheaper availability of Russian coal, China’s coking coal imports may rise in the remainder months of 2022. However, thermal coal import demand is likely to remain under pressure amid sufficient domestic production.
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