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China imported 200 million tonnes of coal in the first nine months of the year, decreasing by 12.7% or nearly 30 million tonnes from the same period last year, according to data released by the General Administration of Customs.
However, In September alone, coal imports rose by nearly 5% year over year to reach 33.05 million tonnes, as overseas energy prices declined recently, showed the data.
China’s coal imports for the full-year of 2022 is estimated to decline by 48.58 million tonnes or 15.2% from the previous year, according to estimates by Guosen Securities. The country imported 320 million tonnes of coal in 2021.
The falling coal imports have forced companies to turn to domestic supply and China’s domestic output increased significantly. According to data released by the National Bureau of Statistics (NBS), China produced a total of 3.32 billion tonnes of coal in the first nine months of the year, rising by 11.2% or 390 million tonnes from the year-ago period.
According to estimates by Citic Futures, domestic coal output will reach over 4.4 billion tonnes in 2022, rising by 10% from a year earlier. China produced 4.07 billion tonnes of coal last year.
Despite the rising coal production, major coal hubs including Inner Mongolia and Shanxi province recently see Covid-19 flare-ups, leading to tightened restrictions on coal mines’ production. Meanwhile, the operation of the Daqin Rail line, China’s business coal-transporting line connecting Shanxi province to Qinhuangdao port southeast of Beijing, has also been affected by Covid resurgence, bringing pressure to coal supply.
According to the China Electricity Coal Index (CECI) released by the China Electricity Council, the transaction price of 5,500 carl/kg thermal coal stood at 1,542 yuan per tonne in the week of October 13 – 20, a rise of 1.5% from the previous week, extending an uptrend that started in September. The prices have surged 33% from the end of August and jumped by 79% year to date.
Cific Futures said in a recent note that, as safety inspections on domestic coal mines and epidemic control measures ramp up and the congestions at ports caused by the epidemic haven’t eased, coal supply in October is expected to be affected.
Industry insiders say that rising coal prices in the international market and relatively low prices of domestic coal supply is the main reason for the sliding coal imports this year.
Australia’s Newcastle coal price index stood at $414.8 per tonne on September 30, surging by 137% so far this year, though it’s about 10% lower than the peak set earlier last month.
That has driven higher the cost for China’s coal imports In the first three quarters of the year, the value of China’s coal import amounted to 198.84 billion yuan, an increase of 45.1% from a year earlier, according to official data.
On the demand said, as the unprecedented heatwave eased in the third quarter, China’s electricity consumption slowed significantly and power generation slipped into declines in September, with generation of coal-fired power and wind power growing at a slower pace, while generation of hydro power and nuclear power falling more quickly.
According to NBS data, electricity generation reached 683 billion kWh in September, falling by 0.4% from a year earlier, of which hydro power generation sliding 30%, while coal-fired power rising by 6.1%.
As the winter heating season approaches, electricity consumption is expected to rebound and falling hydro power means more coal-fired power is needed, but due to a lack of elasticity in coal supply, coal suppy/demand is expected to remain tight, said Citic Futures.