China’s Oct coal exports rise 23 pct on surplus
China’s coal exports rose to 2.56 million tonnes in October, up 23 percent from a month earlier, customs data showed on Tuesday, as waning buying interest from electricity generators added to a surplus at home.
Earlier this year, China’s rapidly growing coal consumption caused imports to rise and exports to slump, sparking a surge in benchmark Australian prices to above $200 a tonne in July, but easing power growth and rising stockpiles have curbed demand. Coal prices have since halved to about $100 a tonne.
But that picture has now been turned on its head as China’s economy slows, with steelmakers shutting in capacity and electricity production subdued, despite the start of winter.
Geoffrey Cheng, an analyst at Daiwa Institute of Research, said the rise from 2.08 million tonnes in September was slightly surprising, but likely reflected traders’ anticipation of new export quotas and a desire to take advantage of contract prices which are above the spot market.
With a growing domestic surplus, exporters are likely to further increase exports once Beijing’s new quotas come fully into force. Despite the jump from September, October’s export figure was still less than half the 5.3 million tonnes exported in October last year.
Traders said the government finally issued its second batch of coal export quotas at 15.9 million tonnes last week, although they have only until the end of the year to execute those deals. Beijing has yet to officially confirm the quotas.
China’s customs office will release data for October’s coal imports later this month.
Although China is the world’s biggest producer and consumer of coal and, for several months last year, briefly became a net importer, the October import figure is likely to remain under pressure from flagging demand.
“Imports will be tough when you have all that domestic inventory,” Cheng said.
China’s coal market switched abruptly in late summer from severe shortage to ample supply, as an economic slowdown shut factories, helping to lower demand for electricity.
Power generation in China in October fell about 0.5 percent from a year earlier, an official newspaper reported last Friday, the first such decline in a non-holiday month this decade. It said coal-fired generation, which provides about 80 percent of China’s power, fell by nearly 2 percent.
Tags: coal, export, exports, import, power