According to analysis from Bimco, year-to-date production of coal in China is up 5.8% on-year for the year-to-date, and seaborne imports are also up 73% on-year.
“Domestic coal supply has faced stiff competition from seaborne coal imports due to price and quality. In addition, coal imports from Mongolia have increased five-fold compared to last year,” said Niels Rasmussen, Chief Shipping Analyst at Bimco.
The increase in production puts China’s coal industry on track to hit its 2025 production target of 4.6bn tonnes in 2023.
“The gap between supply and demand increases led to coal stocks at Chinese power plants reaching a record high of 187 million tonnes in May, more than total year-to-date seaborne imports,” said Rasmussen.
Indonesia accounted for nearly half of the increase in seaborne imports, with Russia and Australia together contributing the other half.
All segments have benefited from the increase in China’s coal imports, but Capesizes have benefitted the most, with a near-doubling of volumes to China from Russia and Australia.
“While it remains to be seen whether China will continue to build coal stocks, it seems more likely that coal supply will have to adjust to the lower coal demand. As coal has accounted for three quarters of the increase in China’s dry bulk imports year-to-date, the market will be hoping that imports continue to be prioritised,” said Rasmussen.
Bimco noted a report from Centre for Research on Energy and Clean Air (CREA), which stated that the production price index (PPI) for coal mining and coal washing increased by 45% and 17% in respectively 2021 and 2022.
“At the same time, to fulfil output targets, mine operators have prioritised quantity over quality – something a China Electricity Council official identified as a problem of “clear decline in coal quality” in January,” said Bimco.
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