Nice, 15 May (Argus) — China is set to import more coal from the US as the country's energy demand is growing and the quality of Indonesian coals, preferred by Chinese buyers, is decreasing.
US exports to China are likely to reach 12mn t this year, an increase of around 6mn t compared with last year, Xcoal chief executive Ernie Thrasher said today during the McCloskey's European Coal Outlook conference in Nice, France.
Thermal coal imports are expected to reach 4mn t, while coking coal imports are likely to exceed 8mn t, as the country's steel and construction industries continue to grow.
US exports increased by around 6pc on the year in the first two months of this year as producers increased output. China has already imported around 1.7mn t of US coal, while Italy and the UK were the second-largest importers with over 1.3mn t imported in the first two months of this year.
China's coal imports dipped in the first half of last year because “pricing in other imports markets was significantly higher than prices in the China market”, Thrasher said.
China has already struggled with a drought this year, which has affected its hydropower generation, but lifted coal imports, Thrasher said. And the country's continued economic growth in southern and southwest provinces prompted higher demand for electricity generation.
China's shortfall in domestic thermal coal and difficulties with transporting material to certain provinces are going to lift imports further.
“China is a huge importer of Indonesian coal, but its value is decreasing. Therefore the Chinese are in need of high calorific material like US coals,” Thrasher said.
US coals can have a net calorific value of up to 6,800 kcal/kg, and high sulphur content, much higher than the majority of sub-bituminous coal imported from Indonesia by Chinese buyers.
“US coal producers have an opportunity to expand the market share of US coal in the seaborne market this year,” Thrasher said. “US coal's quality is far superior to coals coming from Indonesia, which need to be pulverised.”
Coal accounted for less than 40pc of US power generation in July last year — the first time in over 30 years. “With more gas being used in the US, exports will grow significantly,” another speaker at the conference said.
