Last year, an electricity crisis broke out in China. As a result, China had to release Australian coal accumulated in the port to alleviate the coal shortage. Some media reported that China’s unilateral ban on importing Australian coal did not harm Australian coal exports, but China later suffered a lack of energy on its own.

According to Bloomberg, customs data from the fourth quarter of last year showed that China finally released 6.2 million tons of Australian coking coal and 5.5 million tons of thermal coal. The total amount of coal is 11.7 million tons.

As Australia’s insistence on tracing the source of the coronavirus, Beijing called a halt to Australian coal imports at the end of 2020. However, it’s unknown how much coal was stranded in total, and China’s power crisis in the autumn is likely to have soaked up the majority of the thermal coal held at its ports.

Bloomberg reports that China did not win with this ban, but instead, it allowed Canada and the US to make up the coal shortfall.

Despite China’s overall coking coal purchases falling by a quarter to 55 million tons last year, the coking coal imports from the US increased nearly 10 times, accounting for almost 20% of China’s imports. Meanwhile, coal imports from Canada also increased significantly.

China’s thermal coal price rises to $160

The China Development and Reform Commission intervened strongly in the coal and electricity markets last year to curb the rise in coal prices. However, the strategy did not work for long. As the Chinese New Year came, Chinese power coal prices rebounded and rose to more than $160.

According to a report by mainland media on Jan. 24, since mid-January, a thermal coal analyst at the port revealed that the spot price of power coal has started to rise, and on Jan. 24, the 5.500 kcal coal price reached $170 per ton. Furthermore, on Jan. 21, China Electricity Council released the weekly China Coal Purchase Price Index showing that the 5500 kcal thermal coal index is reported at $160 per ton, up $5.80 per ton from the previous week an increase of 3.8% for the month.

The above analysis shows that the current coal market demand has been released in stages, but as the spot price is reduced, coal stocks decrease, causing thermal coal spots to rise.

According to the report, as the Winter Olympics and Chinese New Year approach, coal mine safety inspections tighten, and some coal mines are on holiday one after another. Therefore, the coal market has been closed, and coal quantity decreased.

In addition, the coal price at ports is now rising fast, and the coal price at the pit is rising slowly, which leads to the high shipping cost for traders, so most traders suspend shipping or only sell locally.

The average arrival cost is currently about $3 per ton, and traders send coal mainly to fixed users.

In December last year, the continuous decline in coal prices, coupled with four consecutive sharp cuts in coal prices by state-owned coal mining enterprise China Shenhua, prompted traders to sell. As a result, many large trading companies have sold off their coal. As a result, this year, market coal was in short supply after demand pulled up at the beginning of this year.

At the same time, port coal stocks have also declined. The Bohai Seaport inventory is 16.35 million tons, a daily average decrease of 260,000 tons compared to last month.

The current port inventory is rapidly decreasing, and there is still structural support in the port market due to the tight coal volume, which is expected to underperform this week.

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