China imports record thermal coal volumes in 2021

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China's thermal coal imports will hit a record high this year, while overall coal production is also on track to hit its highest ever level.

A firm second half of the year drove China's aggregate January-November thermal coal imports to 237mn t, higher than the full-year totals for any of the past decade. Assuming December imports are in line with the five-year average of 15.8mn t then total 2021 imports will reach north of 250mn t, equivalent to around a quarter of annual seaborne thermal coal trade.

The record import volumes come despite the Chinese government's informal ban on Australian coal, implemented in mid-2020, as well as successful efforts to boost domestic coal production in the latter months of this year.

In the absence of Australian coal, Chinese buyers have turned to alternative suppliers, such as Indonesia, South Africa, Russian and Colombia for their requirements.

Chinese coal production was 3.67bn t in January-November, up by 4.2pc on the year, according to the National Bureau of Statistics. This means that annual production is likely to surpass the 2013 peak of 3.97bn t.

The recent improvements in both domestic production and imports have cooled an overheated market in China and helped to bring fundamentals more into balance. Government price intervention has also contributed to recent downward price moves.

Argus' consultancy division expects Chinese thermal coal imports to remain firm in the coming years, with seaborne thermal coal imports forecast at 260.3mn t in 2021, 276.6mn t in 2022 and 270.5mn t in 2023.

The International Energy Agency said last week that coal demand growth in China is expected to average less than 1pc/year between 2022-24, with coal-fired power generation growth expected to rise by 1.4pc/year over the period.

China's November thermal coal imports rise

China's thermal coal imports increased firmly in November compared with the same month last year after the government eased import quota restrictions. November's imports also rebounded from October when Beijing announced coal market intervention measures.

China's thermal coal imports, including non-coking bituminous coal, sub-bituminous coal and lignite, reached 26.19mn t last month, customs data show. This more than trebled from a low base of 7.4mn t a year earlier, as the government lifted annual import quotas this year and most Chinese utilities exhausted their quotas in the same month of last year.

China's November thermal coal imports rose by 20.2pc from October, after the government adopted stringent measures in the domestic coal market mid-month to try and reign in high prices. Chinese buyers withdrew from the market as coal prices plummeted, postponing or reducing purchases of seaborne coal they had already booked. The bearish sentiment reversed and Chinese utilities returned to the seaborne market after the government's price controls were eased in November.

China bought 237mn t of thermal coal during January-November, up by 24.7pc from the same period last year.

Lignite imports were 11.43mn t in November, up from 3.76mn t in the same month last year and up by 33.5pc from 8.56mn t in October. Bituminous coal receipts were at 8.32mn t last month, up from 2.23mn t in the same month last year and up from 7.53mn t in October. Imports of sub-bituminous coal increased to 6.44mn t last month, 4.92mn t higher from a year earlier and 730,000t higher than October.

China's overall coal imports, which include anthracite, coking coal and thermal coal, reached 35.05mn t last month, hitting a record high of this year, customs data show.

Chinese coal production in November, including anthracite, coking coal and thermal coal, reached 370.84mn t, according to National Bureau of Statistics data. This was the highest since at least April 2015, with the increase coming after Beijing ordered mines to boost production to cool prices.

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China thermal coal imports mn t