As predicted, China’s coal import goes down in the last three consecutive months. Although November import increased slightly from the same period last year to 20.8 million tons, it’s still 19 percent less month-on-month. In its first 11 months, China imported a total 299.3 million tons of coal, a 10 percent increase from last year. It is now obvious that this year’s imports will be more than 10 percent compared to last year’s total annual import of 281 million tons. However, Bloomberg estimates that next year’s coal imports will be eight percent lower next year.
In the meantime, Mongolia’s coal export went up by 4.2 percent to 34.8 million tons. Despite representing an increase from the same period last year, it’s not likely that this year’s export target of 42 million tons will be reached. 57 percent of the total coal export came from Tavan Tolgoi’s group deposits and coal output through Gashuunsukhait port reached 19.7 million tons.
Raw steel production increased by seven percent in the first 11 months to 904.2 million tons
As of November, China’s average coal import price is at 76.97 USD, showing an 8.7 USD decrease from the same period last year. Next year, prices for both coking and thermal coals are expected to fall. Coking coal, for instance, is expected to be stable and maintain growth until Lunar New Year and fall afterward, as predicted by Fenway Energy. According to them, the primary factor could be a supply surplus. This could be connected to increases in mine outputs in Russia, Mongolia, Australia, USA and Canada, and the start of coal production in several new mines. Furthermore, analysts are speculating that factors including an increase of domestic coal production in China and reserves in seaports and coking coal warehouse stocks could drive coal prices down.
China’s domestic coal production reached 3.41 billion tons in November, a 4.5 increase from the same period last year. The combined volumes from the top five coal-producing provinces went up 0.1-26.3 percent. Coal output from Inner Mongolia was 944 million tons, making up 27.7 percent of the entire domestic production alone, while Shanxi province makes up 26 percent. The highest performing province is Xinjiang, with 211.9 million tons in production with a growth of 26.3 percent compared to the same period last year.
Undoubtedly, the biggest factor affecting the price and demand for coking coal is China’s steel industry. Raw steel production increased by seven percent in the first 11 months to 904.2 million tons. In November alone, daily production was 2.68 million tons, 1.7 percent higher month-on-month. However, steel production in the first eleven months exceeded 1.1 billion tons which represents a 10 percent growth. This year, China’s expected to produce 988 million tons of raw steel.
China’s steel production will fall next year, says Li Xinchuan, President of the China Metallurgical Industry Planning and Research Institute. According to the Institute’s study, China’s steel demands will increase by 7.3 percent to 886 million tons this year and fall to 881 million tons by next year. He pointed out “Driven in part by increased domestic infrastructure spending and investment in real estate in 2019, steel demands were higher than expected. China’s industrial output would be generally stable.” China’s main steel consumer – the construction sector – saw a steel demand of 478 million tons in 2019, representing an 11 percent growth. However, it would fall slightly in the next year. In any case, although the country’s steel production would set a record this year, it won’t repeat the success next year, according to analysts.
In addition, a new report published this month by the International Energy Agency mentioned that global coal consumption is forecasted to rise in the next five years. Especially, consumption growth in Asian countries would make the biggest impact. By 2024, India’s consumption would rise by 4.6, while Indonesia and Vietnam would both see a 5 percent increase.
The Government of Australia pointed out that there’s enough resource to meet such rising demands. The country’s Minister for Resources Matt Canavan said Australia’s coal production is expected to increase around 10 percent in the coming five years. Last year’s production volume of 409 million tons will be ramped up to 444 million tons by 2024, he added. Coal revenues would reach 45.9 million USD this year. The start of coal production in the Adani group deposits is likely to make a big impact on supplies.
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