BY CLYDE RUSSELL
LAUNCESTON, Australia — China’s imports of seaborne thermal coal are poised to climb to the most this year in August while those of fellow top buyer India slump to a 3 1/2-year low.
The diverging trends in the world’s two biggest importers of the fuel – used mainly to generate electricity – largely reflect the interplay in their domestic markets of coal production and the rising deployment of renewable energy.
China’s seaborne imports of thermal coal are estimated to rise to 25.63 million metric tons in August, up from 22.77 million in July and the most since December last year, according to data compiled by commodity analysts Kpler.
Imports from top thermal coal exporter Indonesia are on track to reach a five-month high of 16.13 million tons, while those from second-ranked Australia are expected to rise for a third consecutive month to 5.84 million.
The increase in China’s imports of seaborne thermal coal at first glance appears incongruous with official data showing thermal power generation easing 1.3 percent over the January-to-July period, amid rising hydropower and renewable output.
But thermal power generation, which in China is overwhelmingly coal-fired with only a small contribution from natural gas, rose 4.3 percent in July from the same month a year earlier, according to data released on August 15.
At the same time, China’s domestic coal production was slipping with July output of 380.99 million tons being down 3.8 percent from the same month last year and the lowest since April 2024.
The higher thermal generation and lower coal output was enough to spark buying interest from China, while low prices for seaborne thermal coal also helped boost demand for imports.
Indonesian coal with an energy content of 4,200 kilocalories per kilogram (kcal/kg), as assessed by commodity price reporting agency Argus, dropped to a four-year low of $40.45 a ton in the week to July 4.
The stronger buying interest from China has led to a mild recovery in the price, which rose to a two-month high of $43.33 a ton in the week to August 22.
A similar dynamic is underway in the main grade of Australian coal sought by China, which has an energy content of 5,500 kcal/kg.
This grade ended at a five-month high of $71.92 a ton in the week to August 22, having risen 9.4 percent from a four-year low of $65.72 in the week ended June 6.
The recent rise in prices would appear to be almost entirely a China-led factor, as India’s imports of thermal coal have been weakening.
August arrivals are forecast by Kpler to come in at 9.74 million tons, down from 11.99 million in July and the lowest since February 2023. They are also down almost by half from May’s 17.96 million tons, which was the peak so far this year. — Reuters
