China's lead in coal imports over India is the largest it has been in more than 10 years
China, the largest coal importer in the world, has extended its lead over India, No. The gap between China and India, the world's No. 2 coal buyer last year, was the largest since at least 2013. Customs data show. This helped cement its grip on global markets while also helping to stem a price slide.
According to the International Energy Agency, global thermal coal prices are still 50% higher than average for the period 2017-19, despite a decline from the record highs reached after Russia's invasion of Ukraine in 2022.
China's appetite for commodities is keeping prices in their current range. Ramli Ahmed, president director of Indonesian miner Ombilin Energi said that if prices don't drop, they will.
Customs data revealed that Chinese coal imports reached a record 542.7 millions metric tons by 2024. This is more than twice the 250.2million tons imported by India. The gap had narrowed in the four-year period before the pandemic when China's average lead was 26%.
Toby Hassall is the research lead for coal market at LSEG. He said that purchases by China in this year amounted to a record of 41% of world imports.
The IEA warns that, while the IEA expects Chinese coal imports will shrink in the near term, "Chinese imported have consistently exceeded expectations in recent years".
Argus expects that the reduction in imports will be due to the relaxation of stock-building requirements for Chinese power plants, and the decreasing role of coal in power generation. However, volumes are expected to remain close to levels in 2024 because industries continue to demand this fuel.
CHINA VERSUS INDIA
Industry players say that Chinese buyers prefer foreign coal due to the discounts on domestic prices. India's coal is cheaper due to its low production costs.
China and India both want to increase production to reduce import costs, but China's frequent mine inspections have slowed the growth of its output.
India's thermal coal imports - used to generate electricity - dropped by about 3% in 2018. In China, they rose by 13% during the first eleven months of 2024.
According to Bigmint consultancy, India's imports of coking coal will grow by 4.7% by 2024. Meanwhile, Chinese imports of fuel for steelmaking grew 23% during the 11-month period ending November, as shown by customs data. This was partly due to the disruptions caused by mine accidents in Shanxi, the main producing hub.
Bigmint data revealed that Indian buyers tended to prefer cheaper thermal coal from South Africa and Indonesia, as opposed to Russian cargoes.
As Russian coal prices dropped, countries such as Indonesia and South Africa regained a major position in India, said Vasudev Pamanani, director of India's I-Energy Natural Resources.
China increased its thermal coal purchases from Russia and Mongolia, reducing its dependence on Indonesia as the top exporter.
In its annual report, Argus stated that "any reduction in Chinese demand is likely to impact smaller Indonesian suppliers before it impacts other marginal suppliers like Colombia or South Africa."
(source: Reuters)
