In January-February 2022, the imported seaborne coal market was affected by the Indonesian coal export ban, and the international situation shocked successively. The coal buyers’ pattern in the seaborne coal market has changed. In this context, what changes occurred in the import of steam coal by Chinese coal importers in April will be described in this article.
According to data released by the China Bureau of Statistics, Chinese Coal Buyers imported 35.38 million tons of coal from January to February 2022, down 13.9% year-on-year, of which the amount of Thermal coal (including lignite) imported by coal buyers was 25.68 million tons, down 24.8% year-on-year.
In January, coal importers imported 17.97 million tons of thermal coal, up 5.5% year-on-year. Although the ban on Indonesian coal exports was lifted in February, spot resources in the seaborne market were scarce, and the price was high, resulting in a significant drop in the number of coal buyers‘ imports. The lowest level of imported steam coal in the same period.
The seaborne coal prices continue to rise due to the tight coal resources in the international market.
The total amount of coal imported by coal buyers from January to February 2022 was $5.86 billion, an increase of 123.8%% year-on-year; among them, the total amount of steam coal (including lignite) imported by Chinese coal importers was $550 million, and growth of 102.1% year-on-year. As seen from the data, driven by the rising coal prices, the total amount of coal resources imported by Chinese coal buyers from January to February decreased, but the amount of imported coal increased significantly.
From the viewpoint of import source countries, Indonesia steadily took the first place, and Indonesian coal imports accounted for about 72.8% of the total thermal coal imported by Chinese Coal Buyers. January-February imports of Indonesian steam coal totaled 18.71 million tons, down 33.9% year-on-year.
February coal buyers imported only 6.51 million tons, down by half compared to last year’s period. There are three reasons for this, one, affected by China’s domestic supply and price stabilization policy, China’s domestic coal prices entered the downward channel, while seaborne coal prices remained high due to the tight spot resources, resulting in a severe inversion of China’s domestic and international coal prices; two, due to the decline in Asian temperatures compared to the same level of the previous year, Japan, South Korea heating time extended, coal buyers have a significant increase in demand for imported Indonesian coal, exported initially to China coal imports Indonesian coal was transferred to Japan and Korea.
Third, against rising natural gas prices, European countries restarted coal power, which increased the demand for steam coal and the acceptance of Indonesian coal prices more than other countries. This triple factor led to a significant decrease in domestic imports of Indonesian coal in China.
Russia is second, accounting for about 13.9% of the total steam coal imported by Chinese Coal Buyers.
A total of 3.58 million tons of Russian coal was imported in the first two months of this year, down 14.3% year-on-year. Coal production and export efficiency are relatively low due to the bad weather in Russia.
Recently, due to the change in the international situation, the price settlement of Russian coal has certain riskiness, and superimposed on the problem of capacity, the number of ships sent to Russia is reduced. It is expected that the number of coal buyers importing Russian coal may increase after the change of settlement and the gradual recovery of capacity.
In the first two months of 2022, Chinese Coal Buyers imported 1.16 million tons of Philippine coal, accounting for 4.5% of the total; coal buyers imported 960,000 tons of South African coal, accounting for 3.7% of the total; coal importers imported 170,000 tons of Mongolian coal, accounting for 0.7% of the total.
China’s procurement of imported coal is expected to remain low. On the domestic side of China, the scope of medium and long-term contracts signed for coal is gradually expanding due to the strengthening of supply and price stabilization, overlapping with the imminent end of the heating season, the demand for coal from downstream terminal enterprises will be eased, and the need for high-priced imported coal from downstream power plants will be somewhat weakened against the background of high imported coal prices.
On the international front, Indonesia may raise the domestic liability obligation (DMO) policy to protect Indonesia’s domestic coal demand, coupled with the fact that Indonesia entered Ramadan in April when Indonesia’s coal production and exports will have different degrees of decline, so it is expected that China’s steam coal imports in April may not be as high as the same period of the previous year.