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China, the world’s top coal importer, may cut imports by up to 30per cent this year as domestic output holds at record levels and strong demand for non-Russian supplies keeps import prices above those in the local market, industry sources said.
The drop in China’s coal imports may help cap global prices that are expected to surge as buyers in Europe and North Asia try to replace lost Russian shipments.
The European Union is expected to impose a ban on Russian coal imports – which would take full effect from mid-August – over the invasion of Ukraine that Moscow calls a “special military operation”.
Energy consultancies forecast China’s thermal coal imports could drop between 11per cent and 30per cent this year as the strong import prices cool demand.
“The market is very quiet. Buyers are reluctant to make deals as seaborne prices are still higher than domestic prices,” said a Beijing-based coal trader.
Australian thermal coal futures linked to benchmark Newcastle prices reached $281.65 a tonne on Friday, while China’s Zhengzhou coal futures were less than half that at 802.4 yuan ($126.15) a tonne.
Beijing capped China’s domestic prices last year to stave off power shortages.
China’s coal imports from Indonesia fell 34per cent from a year ago in the first two months of 2022 after Jakarta curbed exports, Chinese customs data shows. Western sanctions on Russia then caused imports to drop 26per cent in March, Refinitiv data showed.
Consultancy CRU revised down its 2022 forecast for China’s seaborne thermal coal imports to 180 million tonnes, 30per cent less than last year, due to high seaborne prices and strong domestic production, said senior coal analyst Dmitry Popov.
S&P Global Commodity Insights expects combined imports of thermal coal and lignite to drop to 235 million tonnes, down 13per cent from 2021.
Wood Mackenzie analyst Zhai Yu said thermal coal imports could fall by 11per cent to 220 million tonnes this year. The estimates vary depending on the grades of thermal coal the consultancies use in their calculations.
HIGHER OUTPUT
China’s state planner has set a target for daily coal output at 12.6 million tonnes for 2022, higher than a previous peak of 12.4 million a day set in December, state media reported.
China Energy Group, the country’s biggest coal miner, on Thursday said its coal production grew 6.7per cent in the first quarter from a year ago to 152 million tonnes.
China, which refuses to condemn the invasion of Ukraine, has so far shown no sign of increasing coal imports from Russia. Last year it bought about 56 million tonnes of Russian coal, about 17per cent of its total imports.
“Stock building for the summer season has not started yet. For now we only buy if prices are good,” said a manager from a state-backed utility.
“As for Russian coal, people are cautious and not many shipping firms dare to call at Russian ports.”
If Russian coal prices drop as more buyers shun the fuel, however, China could ramp up imports probably by 20 million tonnes more than last year, said Woodmac’s Zhai.