中文
China's coal imports have been rising sharply this year on a yearly basis, indicating little effect from restrictive measures taken by the government to curb imports of the fossil fuel.
In April, China posted a year-on-year increase of 22.3% in coal (lignite included) imports to 30.95 million tonnes, raising the January-April volumes to 126.73 million tonnes, a strong rise of 26.9% year on year, showed customs data.
The surprisingly high imports indicated that the government's measures to curb imports were actually not as strict as expected, and the fundamental reason would be attractive prices of seaborne cargoes.
Early this year market talks said the National Development and Reform Commission, the country's top planner, required this year's coal imports to keep roughly steady with the annual level during 2017-18.
But the reality seems going opposite, with imports mushrooming by 33.1% during January-February, 28.4% during January-March and 26.9% over January-April this year.
China imports nearly 300 million tonnes coal a year. Despite accounting for just less than 10% of China's total demand, imported coal has huge impact on China's coastal market. About 75% of coal imports flow to southern coastal consumption areas.
In recent years, the share of imported coal has been picking up, since domestic supply started to shrink from 2016 when supply-side structural reform was launched while demand was on the rise.
China's coal imports ascended 46% from 204.15 million tonnes in 2015 to 299.67 million tonnes in 2019, which was 6.3% higher on the year, a faster growth compared with 4% rise in raw coal output to 3.97 billion tonnes last year.
The influx of imported coal has both advantages and disadvantages.
Advantages
Large arrivals of imported coal, together with long-term contract coal, help stabilize China's domestic spot thermal coal market, as southern utilities scale down buy of spot coal.
Abundant supply of imported material is also conducive to easing tightness in rail transport and port storage capacity. Or else, downstream demand will be quite hard to be met even though all rail arteries including Mengji, Shuohuang and Daqin run at full tilt.
A ramp-up in imported coal will also help bring down China's domestic spot prices, and subsequently lead to lower cost for power plants, leaving leeway for cut in power tariff.
Disadvantages
China's spot thermal coal prices may hover low if flooding of imported coal causes oversupply in domestic market. This will resultantly impact performance and profit of mining, rail, port and shipping firms, and partly offset the results achieved during the supply-side structural reform.
Import policies
China adopted a bunch of flexible import policies to regulate domestic market to stabilize supply and prices.
These measures include requirement of coal quality, adjusting import tariff, adjusting customs clearance time, and suspending discharge of imported coal at some ports. The latter two measures are mostly used, and have been imposed since February, yet the effect is not that noticeable.
Thus authorities further tightened grips on coal imports in April, according to market sources contacted by sxcoal.com.
Discharge of imported coal was banned at some northern ports. Non-local buyers were prohibited from declaring customs at a few other northern ports, while local users still need longer clearance time of up to 45 days.
Though there is not official notice on banning of clearance, Guangzhou and Fuzhou ports in South China have used 80% of their annual import quotas, implying stricter control on imports in the remaining months this year.
It also needs 45 days to clear customs at Guangzhou and Fuzhou, and unloading of imported coal should be reported to customs authorities in advance.
Owing to these measures, China's coal imports are likely to drop notably. That would help coal miners, over 40% of whom are in loss, out of the mire. Yet whether this could happen is still uncertain, considering tepid demand in global market and comparative advantage of imported coal.
(Writing by Jessie Jia Editing by Harry Huo)
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