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CHINA’S IMPORTS OF AUSTRALIAN COAL RISE IN JULY DESPITE DECLINING TOTAL COAL ARRIVALS

In July, China witnessed an increase in imports of Australian coal, even though the overall coal arrivals declined. China imported 6.31 million metric tons of Australian coal last month, marking a rise from 4.83 million tons in June, and it was the highest import level in three years, as reported by the General Administration of Customs. The imports primarily comprised 6.15 million tons of thermal coal used for power plants and 161,619 tons of coking coal for steelmaking.

The surge in Australian coal imports can be attributed to the high quality of Australian fuel, which remains cheaper than domestic supplies. Moreover, the demand from Chinese utilities stayed strong, driven by the stifling hot weather experienced during the summer. The rising electricity consumption during this period, mainly due to increased air conditioning demand from households, necessitated the need for high-quality Australian thermal coal for power plants.

Trading sources revealed that Australia’s thermal coal with an energy content of 5,500 kilocalories was traded up to 70 yuan ($9.62) per ton lower than domestically sourced coal of the same quality in the southern port of Guangzhou.

Analysts and market participants anticipate that Australian coal imports will remain high throughout the year, assuming no significant policy changes. This is supported by robust import profits and lower domestic output due to stricter mine safety inspections. On the other hand, imports of Russian coal declined slightly to 8.99 million tons in July from the record high of 10.65 million tons in June. However, there was still a 21% increase compared to the same month last year. Imports from Mongolia, mainly coking coal, also saw a 13% growth to 5.94 million tons in July.

In summary, China’s imports of Australian coal saw a substantial increase in July, driven by the superior quality and lower prices compared to domestic supplies. The demand from utilities remained strong due to the scorching summer weather, leading to soaring electricity consumption. Analysts expect these high import levels to continue, buoyed by import profits and lower domestic output.