China's 2019 coal imports set to rise more than 10%: analysts

Beijing

CHINA, the world's top coal buyer, is on track to boost imports of the fuel by more than 10 per cent this year, traders and analysts said on Tuesday, countering earlier expectations that shipments would be capped by Beijing at the same level as 2018.

China's coal imports have already surged 9.5 per cent in the first nine months of 2019 to 250.57 million tonnes, customs data show, and at least 18.84 million tonnes of seaborne coal are due to arrive this month, according to vessel-tracking and port data compiled by Refinitiv.

With China typically bringing in about seven million tonnes more a month on trucks and trains from Mongolia and Russia, total volumes are likely to reach 276 million tonnes well before the end of the year.

Last year's total was 281.23 million tonnes.

"Signs are emerging of a modest recovery in coal import volumes into China, which has led to recent market speculation that the Chinese government may allow a relatively modest uplift in annual imports to around 300 million tonnes," said Whitehaven Coal Ltd, Australia's largest independent coal producer, in a note on Tuesday.

Energy consultancy IHS Markit expects that China may bring in around 320 million tonnes of coal this year.

Some Singapore-based coal traders forecast that Chinese coal imports could reach at least 305 million tonnes.

The rise in imports comes even after Beijing has pledged to curb coal use to tackle persistent severe pollution in the world's top energy market.

Last year it took drastic measures to cap its shipments, halting all clearance of coal cargoes at major ports in December, which sent imports plunging to just 10 million tonnes that month, down from an average monthly level of 22 million tonnes.

"Government priority at this moment is to boost the economy... Relaxing the coal imports curb would help maintain a moderate coal price and therefore cut electricity prices in order to reduce energy costs for Chinese enterprises," said Liu Xiaomin, analyst at IHS Markit in Beijing.

Analysts and traders warned that the customs authorities could still take such action, however, and said that they are closely watching for any change in import policy.

"The market is full of uncertainties at this moment. We have to wait until at least the end of October to see if a new policy will come out," said a Beijing-based coal trader with a leading German power company.

IHS Markit's Mr Liu also warned that the import policy may be adjusted at any time based on coal prices and the economic situation in China.

Still, buyers have not slowed their purchases, thanks to a large spread between domestic and imported coal prices and increasing demand for the fuel ahead of northern China's heating season that kicks off next month, said three other traders with major power utilities and trading houses.

Port prices for Chinese thermal coal with energy content of 5,500 kilocalories per kilogramme were around 575 yuan (S$110.65) a tonne on Monday, while Australian coal of the same quality was sold at US$53 a tonne FOB. REUTERS