China, world’s largest coal producer, has recorded an increase of 26% in its total coal output in the last five years. According to CoalMint estimates, the country’s coal production in 2022 is expected to be at 4.43 billion tonne (bnt) against 3.52 bnt in 2018.
Of the total coal production, 80% is non coking and lignite coal used mainly in power generation and rest is coking coal used by steel mills. The rise in thermal coal production in the last five years stands at around 25% at 3.63 bnt whereas in coking coal the increase is higher at 30%, or 0.79 bnt.
China, also the world’s largest coal consumer, has been focusing on increasing domestic coal output especially since the past two years in order to reduce its reliance on imported coal. Post-Covid outbreak in 2020 and more than expected hot summers in 2021, the country had to face difficulties in securing coal supplies both from domestic and import markets, resulting in blackouts in some cities and stoppage of industrial activities. This made the country increase its efforts to boost domestic coal production and improve its energy security.
In case of coking coal also, the country increased its domestic output to meet the steel mills’ requirements, as an unofficial ban on its key supplier, Australia, has been in place since 2020. In line with the increase in coking coal output, China’s met coke production has also risen by 22% in the past five years to 526 mnt in 2022.
Analyzing province-wise output, Shanxi and Inner Mongolia produced 55% of China’s total coal output. Shanxi is expected to produce 1.29 bnt of coal in 2022 and inner Mongolia, 1.16 bnt.
China’s coal imports down by 11% in 2022
In the last five years, China’s total coal imports have recorded a rise of 3% at 127 mnt. However, against last year (2021), it has come down by 11% to around 304 mnt, as per CoalMint’s estimates.
China recorded an increase of 9% in its lignite imports. However, it imported 49 mnt of non-coking coal in 2022 against 83 mnt last year. In 2020, China imported 87.35 mnt of non-coking coal — the highest in five years (2017-2022). Highest shipments arrived from Australia which gradually decreased amid the unofficial ban by the country.
With regard to coking coal, imports were the highest in 2019 at 74.6 mnt. The same fell by 24% in 2022 as the country increased its reliance on domestic coal.
Indonesia remains the top coal exporting destination for China over the past five years. However, post-Australian ban in 2020 and Russia-Ukraine war in 2022, Russia’s share in total imports during the year has gone up to 22% against 9% five years back.
Outlook
China is likely to push its domestic coal output further in the coming years to ensure its energy security and its dual carbon goals are met. The major fall is expected in case of lignite and non-coking coal as against coking coal. This is because the country’s steel mills still rely on good quality imported coking coal available in the Australian market.
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