30-12-2022 Weakness in Chinese Thermal Coal Market, Commodore Research & Consultancy
The most recently released data as of December 25th shows that the daily coal burn rate at China’s six major coastal power plants has come in at only 824,000 tons. This is 1% lower than was seen one week prior and is down year-on-year by 6%. The year-on-year contraction is of course a negative development. Thermal coal demand is weaker than normal due in part to the current surge in new coronavirus cases. While the nation is reopening, it is still undergoing a significant surge in coronavirus cases and has clearly not yet fully reopened.
Also of note is that Chinese coastal coal freight rates have come under additional pressure as demand for thermal coal remains relatively weak. Coastal coal freight rates have fallen for three straight weeks and are now at the lowest level seen since late January. The nation remains well supplied with thermal coal, and the coastal coal freight market is suffering as a result.
In a further sign of China remaining well supplied with thermal coal, the government announced yesterday that it will be resuming import tariffs on some coal types with rates ranging from 3% to 6%. The tariffs will resume starting in April. We will publish additional information on the tariffs and changes if various coal imports and trading partners are significantly affected.
Regarding coal import totals by nation, the most recently released data shows Indonesia and Russia again contributed to the vast majority of China’s imports last month. Of the 32.3 MMT of coal that China imported last month, imports from Indonesia totaled 20 MMT and imports from Russia totaled 7.2 MMT. Also of note is that 3.8 MMT was imported from Mongolia, 700,000 tons was imported Canada, 300,000 tons was imported the Philippines, and 100,000 tons was imported from the United States. Last month again saw no coal imported from Australia, South Africa, and Colombia.