China’s coal imports tick up in January-February despite risks to outlook

BEIJING: China’s coal imports rose 2.1% year-on-year, official data showed on Friday, as the import arbitrage remained open despite a number of risks to the outlook for imports.

China publishes data for the two months in a combined release to smooth out the impact of the Lunar New Year, which falls in either of the two months.

January-February imports were at 76.12 million metric tons, data from the General Administration of Customs showed, up from 74.52 million tons in the year-earlier period.

China’s coal imports increasingly appear to be under pressure, with two major industry bodies last week calling for limits on imports, particularly of low-quality coal, because of an oversupplied market.

An unseasonably warm winter has weighed on demand for coal and also domestic prices.

Major coal miner Shenhua also suspended spot imports to protect its domestic market sales in the face of mounting port inventories.

A plan by major supplier Indonesia to use its own government-set benchmark price for international transactions beginning from March 1 could further weigh on imports from this month as it creates uncertainty for buyers.

Analysts at Guosheng Securities said in a note the requirement to use the government index – which currently ranges from $1.5 to $14 higher than the prevailing ICI index depending on the grade of coal – is expected to increase the cost of China’s coal imports.

That will reduce China’s demand for Indonesian coal and likely lead buyers to substitute with domestic coal instead, LSEG analysts said in a note.

Analysts from industry body the China Coal Transportation and Distribution Association have forecast imports will fall 1.9% to 525 million tons of coal this year, down from 2024’s record high.

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Guosheng Securities saw thermal coal imports falling even more sharply, declining 4.9% to 385 million tons on the back of a weakening yuan and narrowing import arbitrage.

China has also placed 15% tariffs on US coal imports as the trade tensions between the two major economies heat up.

Shipments from the US however make up a small portion of imports and may be replaced with other suppliers from abroad, analysts say.

China’s domestic coal consumption rose 1.7% year-on-year in 2024, according to the statistics bureau.