China Coal Imports Surge On Increased Steel Production

Statistics from China's Customs indicate that in H1 of 2009, China imported 12.89 million tonnes of coking coal, increasing 3.4 times YoY. In addition the average CIF price of imported coking coal remained at USD 130 per tonne, rising by 14%.

In June, China's imports of coking coal rose to unprecedented heights, at 4.63 million tonnes, surging by seven times. The changes taking place in coking coal imports are also surprising. In H1 Zhang Jiagang port witnessed its coking coal imports increasing by 1062% YoY to 674,000 tonnes and at Rizhao port over 2 million tonnes of coking coal was imported, rising by over 10 times YoY.

An insider from Jiangsu Shagang Group on July 21st said "It's been three years since we last halted the import of coking coal, but now we have been importing it again since March. Our agreement with suppliers in Australia is expected to last till this September and then we will set a new import volume according to the price".

In terms of import volumes in H1 of the year, Jiangsu Shagang Group ranks third among all companies in China. Since March, Sha gang Group has bought from abroad more than 800,000 tonnes of coking coal so far and most of the coal its using now are from Australia and Canada.

In H1 imported coking coal had remained at CNY 100 per tonne to CNY 250 per tonne cheaper than domestic resources. Sha Gang insiders introduced that the CIF price of coking coal of similar quality from Australia and Canada is CNY 200 per tonne cheaper than coal in Shanxi province, and sometimes the gap rose CNY 250 per tonne.

As China's imports surge and capacities recover in overseas countries, the price of imported coking coal seems to have started to edge up. One source said "Taking the transportation fare into account, now the gap remains at CNY 100 per tonne to CNY 150 per tonne making it still quite appealing to import from abroad."

Apart from Jiangsu Sha gang Group, Liuzhou Iron and Steel Group, Angang Group, Baosteel as well as Beitai Iron and Steel Group remain to be the major groups that imported coking coal in the H1 of the year. The price gap has attracted steel makers to sign contracts for coal supply with foreign suppliers with the validity of the contracts mainly lasting for three to six months. Thus the import volume of coking is expected to remain high even in September and October of the year.

The production of coking coal is gradually increasing, and now only 30% to 40% capacities are laid up, compared with 70% at the beginning of the year.

Source: Steel Guru