Chinese coal imports remain low

Chinese coal imports remained weak during 1H15, when China imported 38% less coal (including lignite and anthracite) compared to 1H14. Just under 100 million t of coal was imported. As such, India is expected to supersede China as the world’s largest importer of coal.

Approximately 70% of China’s energy is generated by coal, but recently China has worked to implement more renewable energy sources, such as hydropower. Consequently, there has been a decline in the demand for coal in power generation.

Peter Sand, Chief Shipping Analyst at BIMCO, said: “Currently, overall dry bulk demand is the weakest since 2009 and freight rates gives ship owners few options but to endure. Diminishing volumes as well as dwindling sailing distances for total Chinese coal imports is a drag on the market.”

China’s production of crude steel decreased to 410 million t during 1H15, 1.3% lower than 2014, and metallurgical coal imports decreased by 30% during 1H15 to 21.6 million t.

Australian producers supply the majority of Chinese imports, 50%, but have recently faced competition from Mongolian exporters: metallurgical coal exports from Australia has decreased by 28% during 1H15, while the Mongolian exports decreased by 17%.

Australia is one of the larger suppliers of thermal coal to China. Alongside Indonesia it accounts for 87% of thermal coal imports. Imports from South Africa, however, have ceased.

Sands added: “The eventual implementation of the free trade agreement between China and Australia will eliminate the tariffs currently imposed on Chinese coal imports. An increased coal trade between China and Australia will benefit seaborne trade as current alternative sources are closer to China and thus involve less transportation by sea. On the other hand, as it becomes more favourable for China to import coal from Australia, the chances of seeing beneficial longer-haul trades from, for instance South Africa, unfortunately become less likely.”

Edited from press release by Angharad Lock

Read the article online at: https://www.worldcoal.com/coal/18082015/chinese-coal-imports-remain-low-2745/