China's coal imports are expected not to rise further in 2024 after hitting a record high a year earlier, said an expert at the 2024 China Coal Import International Summit in Xiamen.

 

Wu Wenbin, head of Coal Management at Guangdong Energy Group, anticipated China's coal imports to range 450-500 million tonnes in 2024. The country imported 474.42 million tonnes of coal last year.

 

Wu Wenbin is giving a speech at the "2024 China Coal Import International Summit" in Xiamen  Source: Sxcoal

 

Wu forecast a 4% growth in coal demand this year, citing the government's GDP growth target of 5% and quick installation of renewable energy that will squeeze coal burning for power generation.

 

China will see a rough balance between supply and demand this year, he said, projecting the total consumption to be 4.815 billion tonnes against supply of 4.824 billion tonnes.

 

Together with over 500 million tonnes of stockpiles at all links along the supply chain, the overall supply would be abundant this year, Wu noted.

 

He also predicted a slower growth in domestic supply, citing relaxed requirements on compliance of medium- and long-term contracts.

 

The government no longer explicitly requires a supply task totaling 2.6 billion tonnes that should be broken down and assigned to mines. Instead, the government just asks for an 80% coverage of utilities' demand, compared with the previous year's 105%.

 

Easing the requirements of term contract supply means coal miners have more flexibility to arrange their sales. That is to say, more coal supplies supposed to be delivered under contracts are expected to flow into the spot market. Given spot prices are higher than contract prices, this will benefit coal miners.

 

However, Wu noted a possibility of "a massive influx of imports" when imported coal possesses a sizeable price advantage against domestic spot coal, if the term contract supplies are short.

 

In 2023, the average price for domestic thermal coal, basis 5,500 Kcal/kg NAR, reached 1,010 yuan/t CFR Guangdong with VAT, he said, while imported prices of Indonesian 5,500 Kcal/kg NAR averaged 882 yuan/t CFR with VAT.

 

Wu projected a potential decrease in Indonesia's total coal exports to China in 2024 by 10%, maintaining a level of around 200 million tonnes. He noted Indonesia's domestic market obligation of 220 million tonnes, higher than the 173.6 million consumed last year.

 

Despite temporary challenges due to sanctions, Wu anticipated an increase in Russia's coal exports to China in 2024. Although Russia and China have reinstated coal export and import tariffs, impacting short-term competitiveness, restricted sales channels will lead to a gradual transfer of cost pressure to upstream miners.

 

For 2024, China is forecast to import 100 million tonnes of coking coal, with 55-60 million tonnes from Mongolia. Continuous improvement of transportation capacity and favorable prices relative to international prices will help boost imports of Mongolian coking coal into China.

 

Regarding Australian coal, Wu highlighted the potential for imports to rebound to a normal level of 80 million tonnes in 2024. As China's relations with Australia ease and the capacity-based electricity price policy is introduced, demanding higher coal quality, Australia's high-quality coal is expected to regain strength.

 

The expected commissioning of over 80 GW of coal-fired power generation during the "14th Five-Year Plan" period will drive import demand by some 100 million tonnes in 2025, Wu noted.

 

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