China coal imports stay robust despite lower domestic prices, weaker currency

Shanghai

COAL imports by China held near the highest level in four years, underscoring buoyant demand in the world's largest user even as lower domestic prices and a weaker currency hurt the appeal of overseas supplies.

Foreign purchases fell just 1.1 per cent in August to the equivalent of 925,161 tonnes a day, compared with 935,806 the previous month, the highest since January 2014, according to Bloomberg calculations based on customs data released on Saturday.

Shipments gained 14.7 per cent to 204 million tonnes in the first eight months of the year while slumping domestic coal prices and the currency's longest run of monthly declines since 1994 would have made overseas cargoes more expensive, the strong imports suggest that concern over faltering demand in the summer months might have been overblown.

Daily thermal coal use by China's major power generators averaged 769,000 tonnes in July to August, typically a peak demand season, slightly above the levels last year.

"Coal demand in China remained robust last month at the height of summer," Zeng Hao, an analyst at Shanxi Fenwei Energy Information Services Co, said before the data.

Demand for imports could see some support from government inspections of coal mines, which would crimp domestic output. China embarked on a month-long inspection of local coal mines on Aug 20, a move that's already helped futures on the Zhengzhou Commodity Exchange rebound from a low of 573.4 yuan a tonne in early August to 629.4 yuan last Friday.

Natural gas imports rose last month amid the country's drive towards using more of the cleaner-burning fuel. Shipments including overland and seaborne supplies were 7.77 million tonnes compared with 7.38 million tonnes in July and 5.66 million a year earlier, customs data showed. Imports during the first eight months were 34.8 per cent higher at 57.18 million tonnes.

China's liquefied natural gas imports may be drawn into the brewing trade war with US. The Chinese government last month added US shipments to a list of goods that could be hit with a 25 per cent duty in retaliation to America's tariffs on US$200 billion of Chinese goods.

President Donald Trump said on Friday that those tariffs could happen "very soon", and is planning additional levies on another US$267 billion of products. BLOOMBERG