China Coal YTD Imports Down 16 pct

Imports inch up from Aug but down 16 percent year on year.

China imported 17.77 million tonnes of coal in September, down 16 percent from a year ago, with weak demand and a domestic supply glut continuing to weigh on orders.

Monthly arrivals, which include lower grade lignite, inched up 1.6 percent from August levels, according to preliminary data from the General Administration of Customs on Tuesday.

Shipments over the first nine months fell 29.8 percent to 156.36 million tonnes, with foreign suppliers struggling to compete in a massively oversupplied market.

"The government needs to give more support to boost domestic demand, but at the same time China isn't importing that much, so that helps to rebalance the domestic market," said Helen Lau, commodities analyst with Argonaut Securities in Hong Kong.

"The overall picture is that China has cut production by around 4 percent in the first eight months, but the cuts in Indonesia and Mongolia are much more dramatic and imports are down by 40 percent," she said.

As loss-making Chinese coal miners slash output, the more-efficient overseas suppliers typically benefit from their lower production costs. But not this year as Beijing's decision to devalue its currency has made imports even more expensive for Chinese power plants.

The devaluation has stimulated Chinese coal exports, with September volumes up 65.9 percent on the year to 730,000 tonnes. However, overseas sales remain only a tiny fraction of overall coal trade in the period.

With the economy slowing down and the state waging a war on pollution, domestic coal demand and prices have taken a beating. China has been making efforts, such as urge its giant producers like the Shenhua Group to cut output, to reduce supplies and support the market.

But prices have continued to struggle, with thermal coal at the northern port of Qinhuangdao <SH-QHA-TRMCOAL> falling 24.8 percent this year to 395 yuan ($62.35) per tonne.

Top producer Shenhua said it would cut the price of its 5,500 kilocalorie-grade thermal coal for October to 390 yuan per tonne, down 3.7 percent from September and 26 percent since January.

Benchmark Newcastle coal prices stood at around $54 per tonne by the end of last week, down 13.3 percent since the start of the year.

By David Stanway