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China's March Coal Imports up 15.6PC as Restocking Begins
[Ferro-Alloys.com]China imported 19.69 million tonnes of coal in March, up 15.6 percent on the year, the country's customs authority said on Wednesday, as power plants sought to replenish stocks ahead of the peak summer consumption period.
Imports in the first quarter reached 48.46 million tonnes, down 1.2 percent from the same period of last year, according to the General Administration of Customs.
"Imports from March have shown a recovery, which is related to the increase in domestic prices, and I believe that the recovery will be sustained into April and May," said Zhang Xiaojin, an analyst at Everbright Futures.
Zhang said declining stockpiles, tougher domestic production controls and declining import volumes over January and February had raised the appetite of traders. China's coal sector has been reeling as a result of slowing domestic demand and excess capacity. This has also curbed the country's appetite for imports, which fell as much as 29.9 percent over the whole of 2015.
While coal prices at the port of Qinhuangdao in Hebei province have gained 5.4 percent so far this year, they are still down nearly 20 percent from a year ago, eroding some of the cost advantages enjoyed by foreign suppliers.
Foreign suppliers have expressed concern that China could export some of its surplus coal, as it has done with steel and aluminium, but analysts said that was not likely, with Chinese coal still more expensive than coal from Australia and elsewhere.
"Exports won't rise because although domestic coal prices are relatively cheap, those on the international market are also falling," said Wang Fei of China's Huaan Futures.
While there will be a seasonal spike in coal demand going into the peak summer power consumption season, analysts are not expecting the market to strengthen in the coming months, or for imports to rise significantly.
"After one or two months, buying by power plants is likely to slow, and the price trends at that point will depend on upstream capacity cuts and whether small-scale mines will be restructured," said Wang.
The government has said it would shut 500 million tonnes of production capacity in the coming three to five years as it tries to reduce an annual capacity surplus estimated at around 2 billion tonnes.
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