China and India boost seaborne thermal coal imports

China, the world's biggest coal producer and importer, saw arrivals of seaborne thermal coal of 29.7 million t in March, according to data compiled by commodity analysts Kpler.

This was up from 23.03 million t in February and was also higher than the 28.62 million t in March 2023. For the 1Q, China's seaborne imports of the grade of coal used mainly to generate electricity were 80.64 million t, up 17.2% from the 68.82 million t recorded in the same period in 2023.

The strength in China's imports has been driven by a combination of strong growth in power demand and by seaborne prices being competitive with domestic coal. Official data showed China's power consumption was 11% higher in January and February 2024 compared to the same months in 2023, and power generation rose 6.9% in 2023, outpacing the 5.2% growth rate for the economy as a whole.

China's electricity demand has been boosted by a variety of factors, including increasing electrification of the vehicle fleet, higher demand from air conditioners and appliances, and increased electrification of industrial processes, such as some types of smelting. A drop in hydropower output amid drought has also boosted fossil fuel generation, predominantly coal-fired, further lifting demand for the fuel.

China's domestic coal prices have also remained relatively high with thermal coal at Qinhuangdao trading at ¥825 per t (US$114). While this was down from a peak of ¥940 on 27 February, the prices of seaborne grades popular in China have also been declining.

Australian coal with an energy content of 5500 kcal/kg, as assessed by commodity price reporting agency Argus, slipped to US$87.37 per t in the week to 28 March, down from the high of US$96.66 in the seven days to 1 March. Indonesian coal with an energy content of 4200 kcal/kg ended at US$55.70 a t, down from the high of US$58.17 from the week to 8 March.

Indian Strength

It was similar in India, where growth in power demand has been fuelling coal imports, which reached 15.21 million t in March, up from 14.09 million t in February and 13.41 million t in March 2023, according to Kpler. 1Q thermal coal imports were 42.79 million t, up 23.8% from the 34.57 million t in the same period a year earlier. India's top supplier of seaborne thermal coal was Indonesia with March arrivals of 10.23 million tons being the highest in four months.

Australia was not a major supplier of thermal coal to India, with most of the coal trade between the two countries being metallurgical coal, which is used to make steel. However, it's worth noting that US supplies to India have been increasing, with March imports at a three-month high of 1.10 million t and an estimated 1.62 million t expected to arrive in April, which would be a record high.

At the same time, India's imports of Russian thermal coal have been slipping, with March arrivals of 730 000 t being the lowest since November 2023. A combination of Western sanctions on shipping and concerns over the safety of transiting the Red Sea has boosted the landed price of Russian coal in India.

(Source: Reuters, Clyde Russel)

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