China’s seaborne coal imports slide by nearly 30% in wake of Beijing’s latest restrictions

On April 16, in a bid to boost boost domestic thermal coal prices and production, China imposed restrictions on coal imports at certain ports in south and eastern China, including Xiamen, Quanzhou, Meizhou, Fangcheng, Zhoushan, and Ningbo among others. The restrictions have come in various forms, from a total ban on berthing and unloading of imported coal, to the tightening of customs clearance procedures and, according to analysts at Banchero Costa, the bans are already becoming visible in terms of shipments to the People’s Republic.

The country had previously tightened coal imports from July 1 2017, by banning small ports from receiving foreign coal cargoes and delaying the process of issuing quality reports for imports. These restrictions were subsequently eased at the end of last year to meet strong winter demand and overcome gas supply shortages, with the pace of customs clearance procedures at many South China ports returning to their normal level of 10 to 20 days and, in some case, as fast as seven to 10 days.

In March this year, the National Energy Administration (NEA) in Beijing stated that China aims to produce 3.7bn tonnes of coal in 2018, an all-time high and increase of 7.3% year-on-year. In the first three months of 2018, China’s coal production had increased 3.9% year-on-year to 0.8bn tonnes according to the National Bureau of Statistics of China (NBS).

The new restrictions already appear to be impacting Chinese coal imports, based on vessel-tracking and port data compiled by Thomson Reuters Supply Chain and Commodity Forecasts. China’s seaborne coal imports fell to 3.45m tonnes in the week ended April 21, down almost 30% compared to the 4.92m tonnes weekly average that was recorded from January 1 to April 15. The figure is also lower than the weekly average of 4.45m tonnes for seaborne imports in 2017.

“With the restrictions in place, Chinese coal imports appear likely to stay flat or decline this year,” Banchero Costa predicted in its latest weekly report. The reduction of Chinese demand is also expected to pressure international thermal coal prices, which could help to increase India’s import volumes from Australia.