Coal news and updates

China’s 2021-25 met coal market seen balanced, scrap usage to cut coal demand

China’s metallurgical coal supply and demand during the 14th Five Year Plan period (2021-25) is expected to remain balanced, on the back of higher steel scrap usage expectations that could eat into coking coal demand, sources said this week.

The National Development and Reform Commission sees China’s 2025 steel scrap usage rising to 320 million mt on carbon neutrality goal, its latest data showed. China used 260 million mt steel scrap back in 2020, replacing 410 million mt 62% iron ore.

China is aiming to reach carbon neutrality by 2060, but is planning to hit peak carbon emissions much earlier, by 2030. As part of China’s broader carbon plans, the steel industry has been tasked with keeping its 2021 production lower than 2020 levels.

During the 2021-25 period, Chinese crude steel output could plateau, which would cut molten iron output by 50 million mt and trim 21 million mt of coking demand in the period, Baosteel Group’s research arm Hwabao Securities said.

This translates to steelmakers consuming 28.1 million mt less met coal during the period.

If 2021-25 domestic steel scrap volume is higher than expected, and steel demand sees steep fall, cutting molten iron output, then coking coal demand could weaken, Hwabao Securities said.

China’s steel scrap originates from three sources; from steel sector’s steel scrap, industrial sector’s processed steel scrap and amortized steel scrap, according to Beijing-based China Securities Co, or CSC.