China Coal Imports Down 12% Y-o-Y in Mar’19

According to the data provided by General Administration of customs, Chinese coal imports have fallen 12% from a year-ago to 23.48 MnT in Mar’19.

Imports were 33% higher on the month from 17.64 MnT in Feb’19, but remain subdued as coal shipments were reportedly affected by lengthy customs checks at ports across the country.

Chinese coal imports in CY18 remain broadly steady from CY17, driven by government policies which had impacted the foreign supplies.

Imports declined sharply in Nov-Dec’18, as authorities tightened restrictions to cap total coal imports at the same level as 2017. However, imports had rebounded in Jan’19, when the annual import quota was reset.

There also have been reports of extended custom clearance at major ports, which creates uncertainty regarding China’s coal policy.

Going forward, there are several factors expected to influence China’s coal imports:

1. Coal Consumption: Chinese coal consumption is projected to increase marginally. While the government is seeking to reduce the share of coal in the energy mix — in favour of gas and renewable to improve air quality — an increase in electricity demand is expected to drive an overall increase in coal demand in the short-term.

2. Coal Production: Chinese coal production (which accounts for almost half of total world production) is projected to recover, following three years of industry reforms, with the bulk of capacity closures largely concluded.

3. Coal Prices: China’s domestic coal prices are likely to come under pressure in an oversupplied domestic market, and the government is expected to continue to carefully manage the balance of domestic consumption and production.

Media reports have also claimed that the country would continue to cap imports in order to support its domestic coal producers. So far in the first quarter of CY19 (Jan’19-Mar’19), Chinese coal imports have reached 74.63 MnT, slightly lesser on the year from 75.42 MnT recorded in the same period last year.